Fundamental elements must be addressed to create a successful regulatory authority. In particular, countries must establish a framework that creates an effective regulator, as well as determine the appropriate legal status of the regulator and the impact, if any, that the organization’s legal standing has on its operations and functions. The legal status of the regulatory authority will depend on the country’s political and legal systems.

Once the regulator’s mandate and competencies have been established, it is important to determine the regulator’s institutional design, as well as its relationship with the government, industry, and the public. The institutional design of the regulator will affect the structure of the regulator, including its leadership and management organization and its organizational and administrative structures. Additionally, the successful management of a regulator and the effective exercise of its functions will be affected by the administrative structure of the regulator, such as its staffing process and the ethical conduct of its staff. Overall, it is important that the organizational and institutional framework provides for some measure of regulator independence, transparency and accountability.

6.5.1 Establishing an Effective Regulator

Independence is a critical attribute for a regulator to be effective. However, effectiveness has additional dimensions (see Figure 5-A). In a broad sense, an effective regulator is structurally and financially independent, but the real effectiveness of the regulator will lie in how it achieves successful functionality, ideally in an independent and autonomous manner.

On the one hand, in a structural sense, independence means guaranteeing that the regulator maintains an arms-length relationship with private industry and the other branches of the government.1 On the other hand, successful functionality is achieved when the regulator establishes clear rules that will govern such matters as its mandate and functions, its funding, and the implementation of its authorities, and then is able to execute those rules fairly and in a timely fashion.

Summary of aspects of an effective Regulator as discussed in this Chapter:

Providing the regulator with a distinct legal mandate, free of ministerial control.

Prescribing professional criteria for appointment.

Involving both the executive and the legislative branches in the appointment process.

Appointing regulators for fixed terms and protecting them from arbitrary removal.

For a board or commission, staggering the terms of the members to ensure continuity within the top ranks of the agency.

Exempting the agency from civil service salary and employment rules that make it difficult to attract and retain well-qualified staff, as well as to terminate poorly performing staff, as necessary where the civil service system and salaries do not seem to work.

Providing the agency with a reliable and adequate source of funding.

Practice Notes

6.5.1.1 Structural Independence

A regulator can function in an
effective manner in a given market within a range of organizational structures.
As discussed more fully in Section 5.2, there are various institutional options
for structuring a regulator. In some cases, although increasingly rare, the
ministry may be responsible for regulating the sector. Alternatively, there may
be a unit inside the ministry that acts in the capacity of a regulator. There
may be a formal office outside a government ministry that serves as the
regulator. Lastly, a regulator can be legally independent; that is, separate
from the central governmental structure.

Pursuant to the World Trade
Organization (WTO) Reference Paper that requires countries to establish a
regulator separate from the operator, in recent years many countries have
established a structurally independent regulator, which separates the function
of regulating the telecommunication market from that of supplying services.1 Governments have identified the need to clarify and separate the
various functions of the state, as it often acts as: (i) owner/shareholder of
enterprises ( i.e., incumbent
providers of basic services); (ii) regulator ( e.g., enacting and enforcing the general
rules); (iii) overseer of competition in the market; and (iv) protector of
consumer interests.

Providing a regulator with structural
independence will reduce the possibility of political or industry capture. When
a regulatory body bows to external pressure from operators or other government
entities, it often lacks independence and its decisions are neither objective
nor transparent. For example, regulators with ties to state-owned incumbents
may bar or delay the introduction of new technologies and services or fail to
resolve interconnection disputes in order to protect the interests of incumbent
operators. However, governments must also ensure that they do not create a
situation whereby the regulator itself is effectively “captured” (meaning undue
influence by politicians and/or dominant players) because a statute or
regulation provides that the regulator is responsible for ensuring the health
of the industry (including the incumbents), and as a result, the regulator is
of the view that it must take actions protective of the incumbent operators. In
addition, regulators are often forced to take certain “protective” actions
because of exclusivity provisions imposed on them by government policy (e.g., that the incumbent
operator is granted exclusivity over part of the market for a certain number of
years in order to prohibit the introduction of new entrants and/or new
technologies that may threaten the incumbent’s market share – e.g., VoIP).

These decisions can be detrimental in
that they often limit competition that would benefit consumers and erode confidence
in the regulator since the regulator is perceived as “captured” by the
incumbent or other government entities. Ultimately, the mandate of the
regulator should not be to ensure the viability of certain industry
participants, but to protect consumer interests.

Although structural independence is an important element of
an effective regulatory environment, it alone is not sufficient to ensure
successful development of the sector. In order to be fully effective, a
regulator also requires financial independence and functionality, as further
discussed below.

6.5.1.2 Financial Independence

The funding sources and budgeting processes of regulatory authorities can have an important impact on their independence, efficiency and cost of regulation. The source of a regulatory authority's funds and the process by which these funds become part of the authority's actual budget can directly impact the degree of a regulator's autonomy and competence when carrying out its responsibilities.

The funding mechanism is critical to ensuring effectiveness of the regulatory function. While a regulator's budget may come from the government or from the telecommunications sector itself through licensing fees, spectrum fees, fines and other administrative charges, the key is that funding should be free from political and private interest influence.1

There are two primary vehicles used by countries to fund a regulator's budget. Although a country may use one or the other, funding for the regulator generally comes from some combination of the two sources. One source of funding is a formal allocation from the government's budget. The benefits of this approach can include promoting a greater role of the elected government in directing regulation, as well as establishing policies to support the overall economic goals of a country.2

A second approach is to allow the regulator to collect monies from the industry through fees and contributions.3 Regulators may receive payments from operators for spectrum or licensing fees4, penalties resulting from enforcement, or charges associated with administrative tasks such as providing numbering resources. Some countries assess special taxes on telecommunication operator revenues (in addition to income taxes imposed by the treasury), of which a portion is often earmarked for universal service purposes.5

The ITU's World Telecommunication Regulatory Database 2010 reveals that, for the most part, telecommunications regulatory authorities are funded through general government budget appropriations, licensing (usually one-time) fees, spectrum fees, regulatory fees (usually annual fees that can be based on a percentage of operator's turnover or revenues), or a combination of these sources. (See Figure 5-B.) Of the 192 countries that provided information on the breakdown of their regulatory authority's financing sources, only 28 indicated that the regulator relies on a single source of funding—over 85 per cent rely on some combination of funding sources.6

B: Sources of Funding for Regulators

Source: ITU World Telecommunication Regulatory Database 2010

(i) Reliance on government appropriations

In certain countries, the regulator’s budget is part of the government appropriations allocated to the ministry under whose authority it resides. In Mexico, the Comisión Federal de Telecomunicaciones (COFETEL) is considered a “decentralized” division of Mexico’s Secretaría de Comunicaciones y Transportes (Communications and Transportation Secretariat - SCT) and even though it can make regulatory decisions independently of the SCT, it must do so within the budget assigned to it by the Secretariat.7 Similarly, the Comisión Nacional de Telecomunicaciones (CONATEL) in Honduras – a “decentralized” division of the country's Ministry of Finance – proposes its annual budget to the Ministry of Finance, and the Ministry incorporates the proposal budget into its government appropriation proposal, which must be approved by the national congress.8 In South Africa, the Independent Communications Authority of South Africa (ICASA) Act of 2000 specifies that the regulatory authority will be funded by a parliamentary appropriation. The same act also indicates that any revenues received by the regulatory authority – other than through the government appropriation – must be paid into the National Revenue Fund within 30 days of receipt.9

In these cases, the government's authority to determine the budget gives it a degree of direct influence and intervention, or at least the appearance of such, over the policies and regulations the agency may wish to implement, possibly reducing the agency's effectiveness in regulating its telecommunications sector. The regulator may also face uncertainty as it must rely on the commitment of the government toward the telecommunications sector in order to have the resources necessary to implement its policies and regulations. Lastly, governmental budget limitations may make relying on the government as the only source of funding problematic as the funding level may be inadequate or not released timely in order to meet increasing regulatory needs.

(ii) Use of multiple funding sources, but with little or no control of their budgets

Relying on multiple sources of funding rather than solely on government appropriations allows regulators to have more financial independence and can make them less subject to outside influences. However, having to surrender revenues to the government and having its budget approved by the government can act as a system of checks and balances that prevents a regulatory authority from over-spending and perhaps even over-charging the regulated entities, although this control may be seen as diminishing the regulator's ability to determine the funds it will require to implement the policies and programs needed by the telecommunications sectors.

The National Communications Board (SIDEAMET) of Estonia, which is supervised by the Ministry of Economic Affairs and Communications,10 relies on a number of sources of funding ( e.g. , licensing, numbering), but all revenues collected are deposited in a bank account under the name of the Ministry of Finance of the Republic of Estonia. The revenues are deposited into the state budget and it is the government that determines the appropriation to be received by SIDEAMET each year.11

(iii) Use of multiple funding sources and control of their budgets

The majority of telecommunications regulatory authorities have diverse sources of funding which provide some level of financial independence from the government. Although government budget appropriations are a staple in most regulatory budgets, increasingly regulators have developed other funding sources such as: administrative and service fees; numbering fees; authorization fees; fine and penalty fees; and revenues earned from auctions. A few regulators also look to generate funds by investing in property, leasing facilities, earning interest on local bank certificates and fixed deposit accounts, and obtaining loans and grants from multilateral organizations. Financial independence, coupled with the authority to manage and administer their own funds gives regulatory agencies more regulatory certainty so that they can assert more independence in regulating the telecommunications sector. Nonetheless, there should be rules that ensure such charges are not arbitrary, excessive or discriminatory.

In Brazil, the Agência Nacional de Telecomunicações (Anatel) has the Fundo de Fiscalização das Telecomunicações as its only financial resource . All revenues collected by Anatel must be deposited in this fund and it is from this fund that Anatel obtains its expenditures each year. Anatel receives revenues from several income sources, including: government appropriations; credit operations; concessions, permits, authorizations, and spectrum fees; fines and penalties; operating and inspection fees; donations, legacies, subventions and other resources assigned to the Agency; and fees, prices or fines from the sale or leasing of assets as well as publications, technical data and information.12 The situation is similar in Nigeria as the Communications Act of 2003 requires that the Nigerian Communications Commission (NCC) “establish and maintain a fund from which all expenditures incurred by the Commission shall be defrayed.” The NCC receives its funds from government appropriations, licensing fees, spectrum fees, grants, loans, gifts, and aid.13 The Uganda Communications Act of 1997 establishes that the Uganda Communications Commission (UCC) “shall operate its own bank account.”14 However, the Commission must declare any surplus from its operations to the Minister of Finance.

The Telecommunications Regulatory Authority (TRA) in Bahrain, which has an independent budget, also has to declare and relinquish any surplus to the country's public treasury within one month after the accounts have been audited. It is only allowed to keep the surplus (or part of it) for future development projects after coordinating with the Ministry of Finance and National Economy and upon approval by the Council of Ministers.15 The Tanzania Communications Regulatory Authority (TCRA) submits an estimated budget to the Minister responsible for Communications for approval. At the end of the fiscal year, the TCRA deposits “to a special account all surplus funds of the Authority”16 and can use the funds from this special account only for “one or more of the following purposes: (a) consumer education or information projects; (b) special non-recurring projects; (c) budgeted capital expenditure; (d) major rate regulating inquiries; and (e) training, research and development.”17

Another example of a regulatory authority with financial independence is Botswana. The Botswana Telecommunications Authority (BTA) revenues derive mainly from the following sources: government appropriations; licensing fees; service fees; and contributions or endowments from any source. As the BTA has the authority to manage its own budget and can determine what to do with any surplus, the regulator has invested its monies in Bank of Botswana certificates, fixed deposit accounts, as well as in purchasing and leasing properties, thus diversifying its sources of funding to an even greater extent. Presently, BTA has a surplus that allows it to cover operating expenditures for the year, as well as the flexibility to evaluate its capital expenditure options in order to prioritize projects for the next two years.18

In the United States, the Federal Communications Commission (FCC) operates through a government allocation of funds. However, the FCC is required by Congress to collect regulatory fees to offset a portion of the annual allocation. In recent years, regulatory fees have represented about 90 per cent of the total annual budget. As such, the FCC’s operating budget relies very little on government allocation.

Reference Documents

6.5.1.3 Functionality

The mandate and competences of the
regulatory authority as well as its relationship with government and other
market players depend on the delegation of powers by the state. The degree of
delegation of such powers is determined by the political tradition of the
country and on the political will to create an independent and competent regulatory
authority. These factors influence the specific responsibilities,
authority, and accountability for the performance of the regulator’s specific
activities.

Although complete “independence” is
nearly impossible to attain, the regulator should have sufficient independence
to implement regulations and policies without undue interference from
interested parties such as politicians or other government agencies (functional
independence). The institutional regulations put in place by laws and regulations
as well as the administrative structure of the regulatory authority are
critical to ensure such independence. The degree of independence differs
considerably from country to country.

Checks and
Balances/Balance of Power/Separation of Power

Independence does not mean that
regulators should function in a vacuum, particularly in countries where the
legal and judiciary infrastructure is weak. Independence must be balanced with
clearly identified requirements for accountability, including strict procedural
requirements, reporting mechanisms, public consultation, and substantive
judicial review. Accountability involves establishing: (i) detailed policies
and laws that set forth explicit objectives governing the regulator; (ii)
specific requirements for reporting to the government or Parliament; (iii)
procedural requirements; and (iv) the possibility of judicial review.

It is clear that even if independent,
a regulator is still an administrative body of the government. Accordingly, its
actions should be monitored so that it is accountable for its actions, and
administrative measures must be in place to oversee the activities of the
regulator.

When regulators are first established,
there are inevitably strained relations between the regulator and the ministry
that formerly performed the regulatory functions.1 Relations between the regulator and the incumbent may also be strained
as the incumbent experiences a policy change (normally associated with the
formation of a formal regulator and the inception of its activities). In
addition, when appeals are made to the court, the court is often examining new
issues arising from new legislation about the powers of a new type of
government agency. Thus, there is a learning process for all parties.

One mechanism for this oversight
relates to the financing of the regulator. In many cases, the independent
regulator’s budget must be approved or endorsed by the government before the
finalization of the national budget by the legislative body.

A related issue is the reporting
mechanisms for independent regulators. There are three types of reporting
mechanisms for independent regulators. As stated in the 2000 OECD Working Party
Report,2 the most popular mechanism requires the regulator to report to the
ministry responsible for telecommunications policy. In some countries, such as
Austria, Germany, and the United States, the independent regulator must report
to the legislative body. The third model is exemplified in Canada, where the
CRTC reports to Parliament through the Minister of Canadian Heritage.3 There are a few countries, such as Belgium and France, which do not
impose any statutory reporting obligation on the telecommunications regulator
except for the publication of an annual report.

In most of these cases,4 the reporting obligation is not very specific. Reporting in many OECD
member countries occurs through a publication of an annual report that
describes the regulator’s activities. Some countries, however, impose very
specific reporting obligations on the regulator. For example, in Australia,
ACMA reports each year to the Minister of Communications,
Information Technology and the Arts on significant matters relating to the “performance” of carriers and
carriage service providers.5

As noted in Section 5.3, another key
oversight relationship that influences the independence of the regulator
relates to the way in which the head of the regulatory body is appointed and
under what conditions he or she can be replaced.

In some cases, the decision-making
body of the regulator is composed of commissioners who are appointed by
different branches of the government (for instance, some of the commissioners
are appointed by the head of the administrative body and the others by the
legislative body).

In most OECD member countries, the
head of the independent regulator is appointed by the minister responsible for
the sector or the president based on the recommendation of the Cabinet or the
minister. For example, in Germany, the president and two vice-presidents of the
Federal Network Agency6 are nominated by the federal government upon the proposal of the
Advisory Council to the Federal Network Agency. Then, they are appointed by the
President of Germany. The responsibilities of the president of the Federal
Network Agency are stipulated in a contract between the Ministry of Economics
and Technology and the president of Federal Network Agency. This contract is
subject to approval by the federal government.7

Another important element relates to
the enforcement of regulatory decisions. In the majority of countries, the
independent regulator’s decision cannot be overruled except through a court
decision. In addition, in many countries, while the court can nullify the
decisions of the independent regulator it cannot impose a new decision on the
issue. However, there are countries, such as Canada, Hungary, and Mexico, which
give the minister or the Cabinet power to make changes to the decisions of the
independent regulator either based on appeals or on their own discretion. In
Canada, nevertheless, appeals to the Cabinet must be conducted in a public
manner and the power of Cabinet is generally limited to requiring the CRTC to
reconsider the decision – this is the case with broadcasting. With regard to
telecommunications matters, the Cabinet can directly change the decision,
although this occurs rarely.

Relationships
with Other Entities

The most common institutional
structure used today is the establishment of an independent regulatory authority
with responsibility for implementing and administering the regulatory
framework, but policy-making responsibility resides with a particular ministry.
(See Table 5-2.)

Table 5-2: Regulatory
Institutional Structure

Function

Responsible Organization

Policy development

Government, ministry or executive
branch

Regulation

Separate regulatory authority

Network operation/service provision

Privately and/or commercially
operated telecommunications operators

Within this structure, the division
of regulatory tasks differs greatly. Currently, a highly fragmented and
inconsistent pattern of regulatory responsibilities exist among countries for
telecommunications, postal services, and broadcasting and media matters. In
addition, telecommunications regulators can have sector-specific or
multi-sectoral regulatory functions (for more detail on the institutional
design of regulators, see Section 5.2). This can lead to an inconsistent
pattern of the division of regulatory functions (e.g., licensing, numbering, and spectrum
management) between policy-makers and regulators around the world.

As stated in the 2000 OECD Working
Party Paper on Institutional Structures and Responsibilities,8 the ultimate objective of the administrative structure of regulation is
not to have an independent regulatory body, but rather an effective regulatory
framework. This framework and its implementation determine the ability of a
country to achieve policy objectives such as making the market more
competitive, stimulating technological diffusion and enhancing efficiency, and
ensuring that consumers benefit from these developments.

The regulator is, in fact, a
stakeholder in this process of market development. This makes transparent,
practical cooperation and communication between the regulator and the
policy-maker (as well as with other stakeholders) essential to ensuring that
regulation is responsive to government policy decisions and the realities of
the market.

Although functionally independent,
the regulatory authority must maintain relationships with various other
entities in order to ensure that each organization’s duties and jurisdiction are
clearly delineated, as well as to clarify how the organizations will cooperate
where responsibilities overlap.

(a)
Coordination with the Ministry in Charge of Communications and Other Ministries

Some countries require that the
regulatory authority coordinate most closely with the ministry responsible for
telecommunications.9 Often the regulatory authority is required to support the minister and
other relevant government bodies by preparing technical and strategic documents
on its country’s international positions for submission to various
international fora. The regulatory authority can also propose the general
policy for the telecommunications sector to ensure the expansion of
telecommunications service offerings and the achievement of universal service
objectives. In some cases, the regulator is required to prepare legal texts for
the minister to submit to the Cabinet. Other countries require that the
minister issue resolutions and regulations regarding, for example,
interconnection, pricing and licensing. In some cases the regulator is even
required to obtain approval from the minister for licences to be issued.

In addition to the ministry in charge
of telecommunications, many regulatory authorities are required to coordinate
and interact, from time to time, with various other entities and bodies, such
as:

§ The
prime minister

§ The
ministry responsible for finance or economic affairs

§ The
ministry responsible for commerce and industry

§ The
ministry responsible for defense and other security entities

§ The
ministry responsible for internal administration

§ The
ministries responsible for information and broadcasting, media and content

§ The
ministry responsible for transportation

§ The
ministry responsible for justice

§ The
ministry responsible for research and development

§ The
ministry responsible for science and technology

§ The
competition authority

§ The
spectrum administrator

§ Municipalities

Many regulatory authorities are
financially and administratively independent. However, in some cases, the
annual budget and final accounts must be submitted to the ministry of finance
for approval. In addition, some countries require an independent auditor to
express an opinion on the final accounts of the regulatory authority to the
Cabinet.

While the regulator generally is
responsible for overseeing tariff policies, sometimes the basis for determining
the service tariffs must be approved by the Cabinet after being evaluated by
the ministry of telecommunications and the ministry of finance.

To issue radio licences for the
purpose of the radio or television services, some regulatory authorities must
obtain the approval of the minister of information or the ministry in charge of
broadcasting, media, or content.

(b)
Coordination with the Competition Authority

A key relationship within this
context is the relationship between the telecommunications regulator and the
competition authority. As the telecommunications market shifts from monopoly to
competition-based, there has been increasing involvement of the competition
authority in the telecommunications sector. In most countries, the
telecommunications regulator is responsible for technical regulation (e.g.,spectrum allocation,
number allocation, type approval, and standard setting) as well as
telecommunications-specific economic and social regulation (e.g.,licensing, universal
service, price regulation, the interconnection regime, and rights-of-way),
whereas the competition authority is responsible for anti-competitive behaviour
and mergers. In practice, however, there is some overlap between the
telecommunications regulatory authority and the competition authorities and
within that context, it is important to ensure concurrent jurisdiction and
coordination (see Section 3.3) for more detail regarding the role of the
competition authority).

(c) Coordination with the Broadcasting and
Media/Content Authorities

In countries where telecommunications,
broadcasting and/or media (i.e., content) are regulated by different entities,
it is critical for clear channels of coordination to be established between the
various authorities, particularly as the trend towards greater technological
and service convergence continues. In particular, close coordination is
necessary to enable the growth of IPTV, which may be hampered if there is
conflict between the telecommunications and broadcasting regulatory
authorities. In India, for example, the Ministry of Communications and
Information Technology (MCIT) is tasked with telecommunications policy while
the Ministry of Information and Broadcasting (MIB) monitors content related to
television and radio broadcasting and film.10 In order to clarify the ministries’
roles in licensing IPTV services, in August 2008, India’s Union Council of
Ministers of India approved IPTV guidelines that formally permit
telecommunications operators to provide IPTV.11
Under the guidelines, the MIB allows any operator to offer IPTV, without
further registration with the MIB, provided that the operator:

Holds a
unified access service and/or commercial mobile telecommunications service
license duly licensed by Department of Telecommunications (DOT), which is a
housed within the MCIT; no further registration with the MIB is necessary;

Is an ISP
with net worth of more than Rs. 100 Crores (USD 22 million) and having
permission from the DOT to provide IPTV.

Although IPTV licensing of
telecommunications operators and ISPs is under the purview of the MCIT, the MIB
is responsible for licensing of cable TV operators. Under the guidelines, any licensed cable TV
operator is permitted to provide IPTV services without any further permission. All IPTV providers—whether telecommunications
operators, ISPs or cable TV operators—must submit a declaration prior to
beginning IPTV services to the MIB, MCIT and TRAI that provides details
regarding the proposed service areas, start date and network infrastructure
information. Once operators begin providing IPTV services, the MIB has the
authority to monitor and inspect the facilities, as well as to address
content-related issues.

As India exemplifies, where various
authorities are hold jurisdiction over telecommunications and broadcasting
matters, high-level coordination (e.g., the Council of Ministers) and rules
that set out each ministry’s responsibilities are important—if not necessary—to
ensuring that such converged services are available in the country in a timely
and orderly fashion.

(d)
Coordination with Non-government Entities

In addition to the various government
entities that the regulator must coordinate with, the regulatory authority also
is required to interact with users, consumer groups, telecommunications
operators and service providers, and investors.

In addition, regulators frequently
meet with other regulators either on a bilateral basis or in regional and other
international fora (e.g.,
CITEL, Regulatel, IRG, ERG, CEPT, APT, WATRA, TRASA, COMESA, ETSI, and ITU).

Best
Practices in Building Effective Regulatory Institutions

As stated in the 2000 OECD Working
Party Paper on Institutional Structures and Responsibilities,12 the ultimate objective of the administrative structure of regulation
is not to have an independent regulatory body, but rather an effective
regulatory framework. This framework and its implementation determine the
ability of a country to achieve policy objectives such as making the market
more competitive, stimulating technological diffusion and enhancing efficiency,
and ensuring that consumers benefit from these developments.

The regulator is, in fact, a
stakeholder in this process of market development. This makes transparent,
practical cooperation and communication between the regulator and the
policy-maker (as well as with other stakeholders) essential to ensuring that
regulation is responsive to government policy decisions and the realities of
the market. At the 2009 Global Symposium of Regulators (GSR-09), the
participating regulators established Best
Practices Guidelines for innovative regulatory approaches in a converged world
to strengthen the foundation of a global Information Society.13 A key part of these guidelines, related to
building effective regulatory institutions, provides for the following best
practices:

1.
Regulatory
authorities should be able to carry out their mandate efficiently, while
ensuring consistency and transparency of regulation, equal treatment of market
players and accountability of regulatory decisions.

2.
Regulator
authorities should be empowered with suitable tools to ensure enforcement of
the various laws, by-laws, regulations and procedures.

3.
The creation
of a converged regulator in charge of ICTs and broadcasting could be an
effective step towards enabling market integration in a converged environment.
Should this not be feasible, closer coordination and collaboration between the
sector-specific regulatory authorities in charge of telecom, broadcasting and
electronic media, as well as authorities in charge of competition is essential.

4.
A
converged regulator will require skilled human resources and adequate financial
resources in order to perform its extended mandate successfully.

5.
Strategic
and policy activities to build the information society and to play an
inter-sectoral coordinating role should be integrated into the converged
regulator’s mandate.

6.
Close
collaboration with other concerned agencies is needed to ensure that
appropriate measures and tools are put in place to safeguard Intellectual
Property Rights (IPR), Internet safety covering such issues as the protection
of the children online and fraudulent activities.

7.
Monitoring
and examination of the evolution of regulatory institutions should continue in
order to develop effective, efficient regulation for the development of
domestic markets and consumer welfare, as well as to share best practices

8.
International
cooperation is necessary between national and regional regulatory authorities
in building a harmonized and coordinated approach to oversee the evolution of
the converged markets.

6.5.2 Insitutional Design Options

Governments have a range of options
for regulating the telecommunications sector. When establishing a regulatory
authority, governments must take into consideration the level of development
and liberalization of the ICT sector, resources available within the country,
as well as the historical context and the administrative and legal frameworks
available for regulating the sector.

As competition increases, new
regulatory priorities (e.g.,
market entry regulation) emerge, and issues of regulatory autonomy gain
prominence (with the separation of regulation and operation) and can affect the
choice of structure for the telecommunications regulator.1 The main issues relate to ensuring separation between regulation and
operation (especially in the case where the historical operator was still under
public ownership), guaranteeing an independent and long-term strategy for
regulation and competition in the market and ensuring protection of regulation
from short-term and sometimes personal political and economic pressures. The
regulator also has to be insulated from undue influence by politicians,
industry, legacy operators, and consumers. As a result, much emphasis has been
placed on the need to create independent regulatory authorities for the
telecommunications sector.

Today, a majority of countries have a
national regulatory authority for telecommunications -- the ITU T-Reg website
lists 131 countries with a “separate regulatory authority.”2 Although some of the agencies fall into what are generally called “converged”3 regulatory authorities, the majority can still be described as focusing
primarily on the telecommunications sector. Initial consensus often led to the
establishment of a specific sector regulator, but the growing force of
convergence has prompted a new and growing trend towards creating converged
regulators. The justification is that a converged regulator is better suited to
respond to new technologies and the interdependency of different communications
services. Some countries have taken a different approach by including the
regulation of the telecommunications sector in the mandate of a multi-sector
utilities regulator, or by opting for an approach that veers away from
sector-specific regulation and relies on the application of competition and
antitrust rules to the communications sector.

In selecting the appropriate
institutional structure, countries have various design options available from
which to select, including economy-wide, infrastructure-wide,
communication-wide or purely telecommunications-focused institutions. The
choice depends in part on the extent to which the telecommunications sector is
similar to (or different from) other sectors of the economy in a particular
country and on the availability of suitably qualified staff. The greater the
degree of openness and liberalization in the telecommunications sector, if
matched by the other components of the utilities sector (e.g., electricity, water),
and the greater the similarity in developments among the sectors, the larger is
the scope for the application of cross-sector rules that are applicable to
competitive activities in general. A key question that ultimately drives the
choice of institutional format is whether the regulatory framework strikes the
right balance between recognizing the specificity of the telecommunications
sector and promoting the coherence of regulatory decisions across sectors.4

As the telecommunications market
becomes liberalized and more competitive, disputes among operators, and between
users and operators, generally increase. The regulator needs to have the
authority to effectively resolve disputes and establish procedures to
adjudicate them, and sufficient manpower to oversee enforcement (for further
details on dispute resolution, see Section 6.2). These factors impact
government decisions regarding the mission statement and mandate of the
regulator and in some cases influence the choice of institutional design,
including internal administration and staffing.

Flexibility is also a key issue that
must be considered in choosing among the institutional design options.
Appropriate regulatory structures change over time as sectors evolve. The
change depends on the nature of the issues at stake – in transport and telecommunications,
for example, where monopolies previously considered “natural” are eroding, the
mandate of regulators is likely to change more rapidly.

The choice of institutional design per se will not guarantee
success of the regulator. Whatever the institutional design option chosen,
several important principles should be kept in mind, including:

§ Regulators
must be perceived by industry to be independent – thus the importance of
transparency and accountability of the regulator;

§ Regulators
should have the expertise to assess and make sound judgments on both technical
and industry-specific issues – thus the importance of appropriate appointment
and staffing mechanisms;

§ The
regulator must take into account various viewpoints and interests, including
economic, social and political objectives. This balance should be reflected in
the institutional structure and in the system of checks and balances;

§ The
institutional design, internal structure, and administration must be flexible
enough to allow the regulator to adapt to market realities.

6.5.2.1 Overview and Comparison of Different Institutional Designs

There are four main institutional
designs for telecommunications regulatory entities. First is the single-sector
regulator whose sole function is to oversee the telecommunications sector
(designated as Model 1 in this Section). The term “single-sector” is somewhat
misleading as these entities, which in most cases originated from the
separation of the operational and regulatory activities of state-owned post and
telecommunications companies (PTTs), often include the postal and
telecommunications industry as well as radiocommunications. The second design
is known as the “converged” regulator, meaning those regulatory entities that
oversee a broader range of services which, in addition to telecommunications,
also include information and communications technologies and broadcasting
(designated as Model 2 in this Section). The multi-sector regulatory authority
(Model 3) usually encompasses various industry sectors that are considered
public utilities, e.g.,
telecommunications, water, electricity, and transportation. The fourth category
is not a regulatory authority per se, but an approach in which general
competition policy is the main method of overseeing the telecommunications
sector (designated as Model 4 in this Section).

Characteristics of these models of
institutional entities for telecommunications regulatory agencies are as
follows.

Model 1 – Single sector
regulators

This organizational structure focuses mainly on the telecommunications (and
sometimes postal or information technology) sector, with other government
entities responsible for broadcasting and content-related media issues. Many
countries around the world still use the single-sector regulatory authority
approach,1 including Algeria (Regulatory Authority for Post and
Telecommunications), the Comoros (National Society of Postal Services and
Telecommunications), Jordan (Telecommunications Regulatory Commission, which
includes postal oversight), Egypt (National Telecommunications Regulatory
Authority), and Oman (Telecommunications Regulatory Authority).2 The single-sector regulator also includes organizational structures
where the ministry is a regulator, such as the Ministry of Internal Affairs and
Communications in Japan.

Prior to liberalization it was common
for a state-owned operator to be responsible for regulating the post and
telecommunications industries as well as for radiocommunications issues, and in
some cases, even serving as international representatives of their respective
countries with regard to their operations. After liberalization, this structure
was no longer possible under most countries’ legislation.3 Thus, the operation and regulation functions were separated and
independent regulators were established. In many countries, when
telecommunications regulators were initially established, they simply took over
the “regulatory function” from government-owned PTTs and therefore their
mandate almost automatically included the administration of radiocommunications
and postal services in addition to telecommunications.

In Europe, once the PTTs were
separated and privatized, the regulation of telecommunications, radio and the
postal sector often was assigned to one agency.4 Telecommunications regulators in Europe were established by combining
certain units within the public administration (or from the state-owned
operator) or by transferring employees or units from the ministry to the new
organization. The units that were transferred often remained the same and were
integrated into the structure of the new organization, which was based on
fields of activity and communications technologies. Within this context,
regulators in Europe were generally organized in a technology/field-oriented
regulatory structure and emphasis was placed on the recruitment of
technologically-oriented staff (e.g.,
engineers).

A key advantage of a single-sector
regulatory authority is that it can be focused on the complex technical
challenges of the telecommunications sector, including network and service
development. The telecommunications sector tends to be more dynamic than other
utilities and a single-sector regulator can often adapt to this more easily.
One disadvantage of sector-specific regulators is that sufficient resources may
not be available to staff the different regulator agencies and there may be
duplication for regulatory activities that are common to different industries.

A justification for a single-sector
regulator is based on the perception that the telecommunications sector
includes specific technical issues, such as numbering, that are unique to the
telecommunications sector and exhibits specific characteristics that
differentiate it from other industries. Decision-making within communications
policy is based on the expertise of the regulators. As experts, they
participate in drafting laws and act as advisors to the appropriate ministry or
other authorities when necessary. Regulators require not only need expertise in
the technical, financial, and legal aspects of communications, they also need
to systematically analyse present and future developments, and be able to
cooperate with other countries on sector issues at the international level.
Therefore, it is vital that staff is sufficient in number and suitably
qualified to be able to face such a task. The perceived need for a specialized
skill-set led the Cape Verde Government to establish a separate ICT specific
regulator in 2004 (Institute of Communications and Information Technology –
ICTI) in parallel with and despite the existence of a multi-sector (economic)
regulator (Autoridade de Regulamentação Economica – ARE) which also has a
mandate to regulate telecommunications. Since becoming operational, ICTI has in
practice undertaken both the technical and economic tasks in the ICT sector,
with ARE focusing on the other sectors. This has been in part because ICTI has
the staff and desire to review a wide range of telecommunications issues,
including tariffs, that would normally be within the purview of ARE, and
because the two institutions have come to an agreement allowing ICTI to take
the lead role on telecommunications issues.5

Another advantage of single-sector
regulators relates to the origin of their staffing. In many cases,
single-sector regulators tend to inherit staff from the former PTT and
therefore have a core of specialized professionals from the start with a
thorough understanding of the technical issues and strong engineering skills, a
key advantage when dealing with complex network issues. Opponents of the
single-sector regulatory structure argue that the origin of this specific skill
set is, in fact, one of the key disadvantages of establishing a single-sector
regulator. These critics argue that staff could be biased in favour of the
incumbent, and thus more subject to capture by dominant forces. While this is
an issue to be considered, it is not unique to the single-sector regulator.
Whatever the option chosen, there must be a series of “checks and balances” to
ensure that the regulator can perform its mandate independently.

One major concern within the
single-sector model is the possibility of institutional rigidity. Since a
single-sector regulator is restricted to telecommunications, this type of
structure can limit the effectiveness of the agency and its staff members as it
faces the issues raised by convergence. Given that regulatory authority has
historically focused on a narrow sector, the regulatory authority may become
nearly frozen in time in terms of defining the sector it is regulating. As a
consequence, it may not necessarily draw the appropriate staff from across the
broader communications sector necessary to be flexible and, therefore, is
unable to adapt to the continuous changes in the communications sector. A
practical example of such difficulties has been the case of single-sector
telecommunications regulators having difficulties when incorporating next
generation technologies and services into the regulatory framework.

In recent years, and especially with
convergence in the communications sector blurring the boundaries between
industries, overlapping responsibilities between sectoral regulators has also
become an issue, leading sometimes to duplication of regulations and required
authorizations for what are essentially similar services being offered to the
public. This can cause conflicting decisions across sectors, or indeed lack of
decisions where overlap between mandates cannot be resolved on a political
level. The challenges of convergence have led several countries, including
South Africa and the United Kingdom, to move away from single-sector regulators
and evolve towards a converged regulator, thus merging agencies in charge of
the various aspects of the communications sector.

Model 2 – Converged regulator
With a converged institutional design, all communications services (i.e., telecommunications),
including radiocommunications, broadcasting and media (and in some instances
postal services), are under the umbrella of one agency.

Several countries have followed the
route of converging their institutions dealing with the communications sector,
typically combining formerly discrete agencies responsible for telecommunications,
broadcasting or information technology into one entity:

§ In
December 1999, the Info-Communications Development Authority of Singapore Act
of 1999 disbanded the former telecommunications regulator (Telecommunications
Authority of Singapore, TAS) and the information technology agency (National
Computer Board, NCB), to create one new statutory board, the Infocomm
Development Authority (IDA).6

§ The
Independent Communications Authority of South Africa (ICASA) is the regulator
of telecommunications and the broadcasting sectors. It was established in July
2000 as a result of the Independent Communications Authority of South Africa
Act No.13 of 2000. It took over the functions of two previous regulators, the
South African Telecommunications Regulatory Authority (SATRA) and the
Independent Broadcasting Authority (IBA).

§ In
2001, the Saudi Arabian Council of Ministers issued a decision changing the
name of the Saudi Communications Commission to the Communications and
Information Technology Commission in light of new tasks it assumed in
information technology.

§ Finland
established a converged regulator, the Finnish Communications Regulatory
Authority (FICORA) in 2001, which took over the responsibilities of the
Telecommunications Administration Centre.
In addition to telecommunications-related issues, FICORA is tasked with collecting
television and license fees, issuing licenses for short-term television and
radio broadcasting, monitoring the content of TV and radio programs and
advertisements, as well as monitoring the level and quality of general postal
services.7 FICORA also centrally
administers radio frequencies.

§ In
1997, Italy created a single regulatory body—Communications
Regulatory Authority (Agcom)—with responsibility for all
telecommunications and broadcasting matters. Austria also established such a
regulatory authority in 2001.

§ A
similar approach was also taken by the United Kingdom. The Office of
Communications (Ofcom) was established in the United Kingdom in December 2003
as a result of the Communications Act 20008 and became the
regulator for television, radio, and telecommunications. Ofcom combines five
former agencies: the Broadcasting Standards Commission (BSC), the Independent
Television Commission (ITC), the Office of Telecommunications (Oftel), the
Radiocommunications Agency (RA), and the Radio Authority.

§ In February 2008,
the Korean Government merged the Ministry of Information and Communication
(MIC) and the Korean Broadcasting Commission (KBC) to create the converged
Korea Communications Commission (KCC), which has jurisdiction over both
television and telecommunications-related matters.

§ Even
the European Commission’s Information Society Directorate was granted new
responsibilities for audiovisual and media policies. The new Information
Society and Media Directorate General brings together all three aspects of
modern day electronic communications: broadcasting; computer networks; and
electronic communication services.9

Like the single-sector telecommunications
regulator, the converged communications regulator tends to be strong in
specialized engineering skills in the communications sector, which is an
important core expertise in dealing with complex network issues. In addition,
the converged communications regulator also meets the challenges posed by
service convergence by bringing in related skills, and therefore overcomes what
is generally viewed as being one of the main disadvantages of a single-sector
regulator (e.g.,
a telecommunications regulator overly focused on the telecommunications
sector).

This model also better meets the need
for flexibility in terms of its internal administration’s ability to meet
market realities. It gives the regulatory authority and its staff the
flexibility to better handle the continuous technological and regulatory
changes and developments within the ICT sector. By having all services – which
are increasingly provided over a single network – under one regulator, the
staff responsible for specific services can work with other parts of the
regulator that are dealing with related issues, and therefore the regulator can
take a more consistent approach when considering changing technologies and
their effect on legacy regulations.

In addition, the converged model tends
to resolve some of the overlap between telecommunications and broadcasting that
has tended to become one of the regulatory issues regarding convergence. As was
clearly shown in the EU’s 1997 Green Paper on the Convergence of the
Telecommunications, Media and Information Technology Sectors,10and in its “99
Review,”11 convergence in communications has called into question the
service-based vertical regulatory system, with industry increasingly demanding
a reorganization of the regulatory institutions in order to address the
challenges posed by convergence.

Ofcom believes that convergence is a reality and that a
converged regulator is best placed to nurse that convergence. When the Internet
can deliver what looks to all intents and purposes like television broadcasting
in a few years’ time, then Ofcom and the Government will face awkward choices.
Should, in the interests of fairness, the content regulation of terrestrial,
cable and satellite broadcasting be rolled out to Internet broadcasters? Or
should the content regulation of terrestrial, cable and satellite broadcasters
be significantly rolled back, passing the baton to smart navigational devices
that allow people to find the content that they want (subject to the law) and
avoid the content that they do not want to see or hear? A converged regulator
like Ofcom will I hope be able to bring wisdom to that debate.

Model 3 – Multi-sector
regulator

Multi-sector regulators oversee not only the telecommunications
sector, but other industry sectors with common economic and legal
characteristics (e.g.,
telecommunications, water, energy, and transportation). Costa Rica, the Gambia,
Jamaica, Latvia, Luxembourg, Niger and Panama, as well as state public utility
commissions in individual states in the United States, have chosen this type of
organizational structure.13

The advantages and disadvantages of
multi-sector regulators have been discussed in various fora, and opinions vary.
One of the main arguments generally raised in favour of a multi-sector
regulator is based on the perceived lack of resources and the need for
economies of scale to effectively regulate the different infrastructure
industries and sectors. It is often argued that with this type of structural
organization, one set of staff can be used to oversee a variety of industries.
The rationale is that telecommunications is considered to form part of the
overall infrastructure sector along with other utilities, such as electricity
and water, and that infrastructure services share certain aspects: they are
aimed at providing basic needs to the public; they often use similar
rights-of-way; and they typically involve the economic regulation of large
monopolies with network economic characteristics (i.e., high sunk and fixed costs). However,
experience in some countries, such as Latvia, has shown that existing
multi-sector regulators are performing poorly.

The answer to the staffing question
is straightforward on the one hand and more complex on the other. Looking at
the question in the strictest sense, single-sector regulators will look for
highly technical staff focused on the telecommunications sector and generally
organize their staff in industry-based units (e.g., post, telecommunications, radiocommunications).
Converged regulators will look for staff that can bring in the expertise and
know-how from the different sectors they are regulating. Generally these
regulators are organized in functional units or indeed in horizontal,
project-based units. Multi-sector regulators will recruit
staff specialized in the different sectors, and are generally organized in
terms of the sectors within their mandate although some pool legal and economic
resources to deal with, for example, tariffing issues that may be common across
the different sectors.

An important question within this
context, however, is to what extent staff can actually be used across the
sectors. Often, staff members within this model are generally recruited in
terms of the sector they are regulating and only legal and occasionally
economic staff is pooled to deal with specific issues that occur across the
sectors. Luxembourg, for example, has organized its agency
according to industries/services: telecommunications, electricity, gas, postal
and spectrum management issues – these are then divided into smaller
issue-specific units.14 This can also be seen in Belize and Niger. An interesting discussion of
this issue vis-à-vis state-level PUCs in the United States is presented in the
WDR Discussion Paper # 0204 of March 2002, which claims that:

Examination of the actual organization of U.S.
state-level multi-sector regulatory agencies, the Public Utility Commissions
(PUCs), does not provide much evidence of economies of regulation, except at
the level of the decision-makers, or Commissioners. Generally, staff members
specialize in a particular sector such as telecommunications or water and work
within distinct divisions that are devoted to sector-specific regulation.
Resources are shared at the levels of commissioners, who hear cases pertaining
to all sectors, the senior staff who manage the agency as a whole, and the
legal staff responsible for hearings and related procedural matters. Generally,
the different divisions are located in common facilities and use common
amenities such as libraries, which may yield certain savings. … It must also be
noted that U.S. PUCs do not have jurisdiction over frequency management, cable
and broadcasting. … The U.S. PUC experience shows that there may be significant
economies in areas such as use of buildings, libraries, and training facilities
in common. This does not, however, justify multi-sector regulation as such,
only close collaboration among sectoral regulatory agencies.15

It is also often the case that a
multi-sector regulatory authority is not created from scratch, but is the
result of merging several existing agencies. In most countries it is not
possible to dismiss employees in the course of such a merger, negating the
realization of the hoped-for economies of regulation. In addition, a merger of
two going concerns often creates significant morale problems and results in
increased expenditures.16

Another disadvantage of this model is
that often the telecommunications sector is the most liberalized sector under
the auspices of the multi-sector regulator and therefore can be negatively
affected if the telecommunications regulator is merged with other more highly
regulated and less agile industries. Indeed, it may make matters worse by
having telecommunications regulated in an environment with utilities that are
progressing at a different pace where the needs and priorities are different,
or where resources are practically non-existent. Moreover, by adding sectors,
such as electricity and gas, that do not always produce revenues for the
regulator, the telecommunications sector may bear a disproportionate share of
the costs of regulation, potentially driving up regulatory costs for
telecommunications providers.

Supporters of this model argue that
having a multi-sector regulator can reduce political and other influences
regarding the decision-making process as opposed to, for example, the
single-sector regulator. Despite such claims concerning “capture” (meaning
undue influence by politicians and/or dominant players), this does not
necessarily seem linked to the institutional design option per se but is more a
product of whether a clear set of “checks and balances” is incorporated in the
design of the regulator. Indeed, a risk of the multi-sector regulator could
even be that “capture” by a dominant ministry or entity not only affects a
single sector but all sectors regulated by the multi-sector regulator. In
addition, there may be greater complexity in establishing the legal framework
for the multi-sector regulator, including the level of independence and allocation
of functions as between the minister and the regulator.17 Furthermore, potential delays in instituting necessary reforms may
result due to the disadvantages mentioned above.

Some argue that using cross-sector
institutions to regulate telecommunications is justified in light of the
growing convergence between telecommunications and other sectors. Ensuring that
cross-sector rules and institutions are used to regulate telecommunications as
well as other similar (utility) sectors may bring benefits, such as greater
regulatory certainty (as operators may better forecast what to expect by
observing how the regulatory framework is applied in other sectors) and lower
risks of distortion between different activities. A counterargument is that the
rationale behind establishing a multi-sector regulator is more a question of
regulatory efficiency than of dealing with convergence in the communications
sector. Even within this model it really depends on the mandate of the
multi-sector regulator (i.e.,
whether it deals with just telecommunications or with communications as well as
water, electricity, and transport) to determine whether a utilities-based
regulator has the staff and internal administration that allows it to
effectively cope with the challenges posed by ICT convergence.

As the market develops, and
convergence affects the way in which communications is offered to the people,
regulators not only are expected to possess high technical expertise, but to
have an understanding of the structure and development trends of the
communications market. Furthermore, regulators should be able to anticipate
potential situations that could threaten or interfere with the development of
the electronic communications industry. The concern that staff in a
single-sector telecommunications regulator may face difficulties when
incorporating next generation technologies and services into the regulatory
framework is heightened with a multi-sector regulator since the staff of a
multi-sector regulator would not necessarily be as technically focused on the
communications sector. Obviously, a multi-sector regulator could recruit staff
suited to the task of regulating the communications market, but the risk,
especially where economists and legal experts are shared across the utilities
sector, is that the pool of expertise becomes more diluted, thus compromising
the capability and ultimately the credibility of the regulator.

A clear discussion of the advantages
and disadvantages of multi-sector regulators is presented by Schwartz and
Satola in the Table 5-3.18

Table
5-3: Model 3 – Multi-Sector Regulator

Advantages

Disadvantages

May reduce risk of "industry
capture" because the creation of a regulator with responsibility for
more than one sector can help avoid the rule-making process being captured by
industry-specific interest groups

May reduce risk of “political capture”
because a regulator with responsibility for more than one sector will
necessarily be more independent of the relevant line Ministries, and, in
addition, the broader range of entities regulated by such a regulator will be
more likely to resist political interference in a decision on, say, price
regulation in one sector since that could set a precedent for other sectors

May create more precedents, and therefore
less uncertainty for investors because a decision by an MSR in relation to
one sector on a regulatory issue common to other sectors will set a precedent
that is valuable to potential investors in those other sectors

May achieve economies of scale in the use of
one set of high caliber professionals

May increase risk of “industry capture” by a
dominant industry player not only of the single sector regulator but of the
entire MSR body

May increase “political capture” by a
dominant ministry of not only the single sector regulator but of the entire
MSR body

May increase risk that a precedent set in
relation to one sector could be applied inappropriately in another sector
(although this can also be mitigated by creating strong sector-specific
departments underneath a central cross-sectoral decision-making body)

May have a dilution of sector-specific
technical expertise required where, for example, the skills of a tariff
expert for one sector are not transferrable to similar tariffing issues in
another sector

Model 4 – No specific
telecommunications regulatory authority

An alternative approach is to rely on
the application of competition and antitrust rules rather than on detailed
sector-specific rules and institutional designs. Until the passage of the
Telecommunications Act of 2001, New Zealand, for example, had chosen to entrust
antitrust authorities with the task of administering all rules controlling
market power in telecommunications.19 There was no sector-specific regulatory requirement except for special
obligations on Telecom New Zealand, called the Kiwi Share Obligations, which effectively
regulated the price and availability of residential telephone service. Instead
of sector-specific regulation, the regulatory regime for telecommunications in
New Zealand relied primarily upon general competition law, the Commerce Act
1986, to prevent anticompetitive behaviour. Thus, the primary constraint on the
conduct of telecommunications firms in New Zealand was the same competition law
that applied to all economic enterprises in New Zealand.20

However, in late 2000, the Minister
of Communications determined that New Zealand’s reliance on the Commerce Act
and general competition authority was inadequate in some respects to regulate
the telecommunications sector.21 As a result, the Telecommunications Act 2001, which contained
sector-specific provisions, was passed in December 2001 to complement the
generic competition provisions of the Commerce Act. Furthermore, the position
of a Telecommunications Commissioner, a specialist stand-alone commissioner
within the Commerce Commission, was established, inter alia, to regulate the
telecommunications sector, and in particular to resolve disputes over regulated
services, to report to the Minister on further designations or specifications
of additional services, and to monitor and enforce the Kiwi Share obligations.22 Additionally, the Telecommunications Commissioner has statutory
responsibility for decisions made under the Telecommunications Act.

Reliance on economy-wide rules and
institutions to regulate the sector promotes a coherent treatment between
telecommunications and other sectors.

Less risk of political capture where
the judges are ultimately in charge of enforcing economic regulation in the
telecommunications. Judges are seen to enjoy a clearer and more
straight-forward protection against undue pressures from the government and
are independent from industry.

Non-specialized judges are
ill-equipped to deal with complex telecommunications regulatory issues (e.g., local
interconnection cases in New Zealand).23

Legal processes are often not
designed to give a voice to those who are not directly parties to the
dispute.

Costs of protracted litigation and
regulatory mistakes can be very high.

Sector-specific issues such as
interconnection and number portability may be difficult to resolve in the
absence of sector-specific requirements.

Lack of clear accountability channels
renders it unnecessary to set and achieve sector objectives such as universal
service, thereby opening the door for ineffective or sometimes unnecessary
regulation.

There is no actual functioning
example of this model.

6.5.2.2 Overview and Comparison of Different Organizational and Administrative Structures

Organizational Structures

Determining the ideal organizational
structure for a regulatory authority requires an assessment of various factors
including: the country’s needs and objectives; political environment; legal
requirements; and available expertise in the labor market.1 There are essentially two models of leadership organization for
regulatory authorities: (i) the collegial body (a board or commission composed
of multiple members); and (ii) the single regulator (often given the title of
chairperson or president). Each has its advantages and disadvantages, and
variations of each model are in use around the world.

The collegial body model usually
involves a board or commission made up of individuals with different areas of
expertise, potentially bringing those varied perspectives to bear on each
regulatory issue. In addition, a collegial body could be seen as more
independent, as it is less likely that all members would be influenced by the
same actors, whether in the government or the private sector. Collegial bodies
also often impart a sense of legitimacy in decision-making, as it is less
likely that a single individual was responsible for any particular decision.
However, as in any decision-making process involving more than one actor, the
development of regulatory decisions can be a slower process and more subject to
internal struggle.

By comparison, the single regulator
model has the potential benefit of a consistent approach to regulation and
decision-making, as decision-making authority is vested in a single individual
who may have a unified plan for the telecommunications sector. In contrast to
the collegial body model, single regulators can make decisions much more
quickly, even when constrained by due process regulations. However, the single
regulator is also potentially more vulnerable to undue influence exerted by
external actors, whether in the government or in the private sector. In
addition, a single individual may not be able to match the expertise of a
collegial body made up of individuals from different backgrounds, although
experienced staff can provide substantial expertise.

The number of regulators led by
collegial bodies and single regulators continues to fluctuate as governments
restructure their regulatory frameworks for telecommunications. However, based
on responses received by the ITU to its annual Telecommunications Regulatory
Survey in 2010, approximately 58 per cent of the regulators worldwide are
collegial bodies.2 Based on 2010 data,3 it can be seen that there are significant differences between the
balance of collegial bodies in various regions, ranging 25 per cent in the CIS
region to 74 per cent in Africa. (See Figure 5-C.)4

Figure 5- C: Collegial Body
Regulators around the World

Source: ITU World Telecommunication Regulatory
Database, 2010

Management Structure

(a)
Regulatory authorities headed by a collegial body

Nearly 60 per cent of the 158 countries
that submitted responses to the 2010 ITU survey indicated that their regulatory
agencies are collegial bodies.5 These multi-member commissions or boards of directors are composed of a
varying number of members (usually an odd number from three to seven to
minimize tie votes) that oversee and direct all activities of the regulator.
One member is the chairperson or president of the commission/board and
sometimes has a “casting” or deliberative vote that counts twice and acts as a
tie-breaking vote, if necessary.

Depending on the appointment process
of the regulator, collegial body members can be appointed by one single branch
of government, multiple branches of government and/or other industry
stakeholders. This issue is further discussed in Section 5.3 on Staffing and
Remuneration.

Management
and administrative functions

The day-to-day management and
administrative functions of the regulator are handled in varying combinations by: an executive director, chief executive officer (CEO), the
chairperson, and/or managing director (collectively referred to herein as
managing director). In some countries, like Botswana, Brazil, Canada, Greece,
Ireland, Jordan, Malaysia, Mexico, Portugal, South Africa, and Venezuela, the
managing director of the regulatory authority is the chairperson of the commission/board.6

The managing director acts as a
liaison between the commission or board of directors and the
departments/divisions that comprise the regulatory authority. In the Dominican
Republic, the managing director is part of the board and acts as its secretary,
but does not vote.7 In Peru, the managing director of the Organismo Supervisor de la
Inversión Privada en Telecomunicaciones (OSIPTEL) participates in the board of
directors’ meeting sessions, but essentially acts as an observer and cannot
vote.8

The duties and responsibilities of
the managing director differ from country to country. In Bahrain, the general
director not only handles the day-to-day affairs of the regulator, but also
determines the internal structure and organization of the agency, and has
authority to: delegate his functions to other agency staff; employ staff
members and consultants; and establish conditions of employment for staff
members (this last one with approval from the board).9 In Peru, OSIPTEL’s managing director is responsible for managing the
regulator and carrying out the policies established by the board of directors
and president of the regulator. In addition, the managing director is
responsible for: the legal, administrative and judicial representation of the
regulator; proposing policies and strategies for the development of OSIPTEL;
developing the annual report and the regulator ’s budget for approval; and
hiring, promoting, suspending and firing staff members (decisions regarding
management staff members need approval from the board of directors and
president of OSIPTEL).10

(b)
Single individual structure

Single individual regulators are
headed by a CEO, president or director general (collectively referred to herein
as CEO) who oversees all policy, management, and administrative activities of
the regulatory authority. In most cases, the CEO is appointed by the central
government, often the minister responsible for communications.
The term of office is fixed and generally varies from two to six years.
However, in certain countries, including Estonia, Ethiopia, Liechtenstein and
Norway, the CEO does not have a specific term of office.11

The duties and responsibilities of
the CEO differ from country to country, but they are generally granted a broad
scope of authority and responsibility. In Romania, the president of the
National Authority for Management and Regulation in Communications (ANCOM) has
a broad slate of responsibilities including approving ANCOM’s strategies,
activity plans, investment plans and internal regulations, issuing decisions,
approving the regulator ’s organizational structure, including the powers of
the two vice-presidents, and representing ANCOM in its relations with the
Parliament, Government, ministries and other public authorities and
organizations.12 In Guatemala, the Superintendencia de Telecomunicaciones (SIT) is
headed by a superintendent who is responsible for managing and defining SIT
policies, developing the regulator’s organizational structure, appointing and
removing SIT employees, preparing its annual budget, and informing (at least
twice a year) the Ministry of Communications, Transportation and Public Works
of the regulator ’s activities and internal administration issues.13

The CEO is typically assisted by one
or more deputies to whom he can delegate responsibilities. For example, in
Romania, the law sets out that the president of the ANCOM is to be assisted by
two vice-presidents.14 Similarly, in Denmark, the director general of the National IT and
Telecom Agency is assisted by two deputy director generals.15

Once the scope of work and type of
management structure is established, a country must determine how the functions
of the regulatory authority will be organized (e.g., whether by industry/service, function
or project).

(a)
Industry or service-based departments

Many regulators follow a vertical
(all regulatory issues) structure comprised of departments that address
specific services areas (e.g.,
broadcasting, telecommunications, and information technology) under the
authority of the regulator, as well as departments typically responsible for
operations and administrative functions.16

In the case of Luxembourg, which has
a multi-sector regulator, departments/divisions are responsible for the
following sectors: electronic communications, spectrum management, transport
and distribution of electricity and natural gas, postal and railway . Each of
these departments/divisions is divided into smaller issue-specific units.18

(b)
Function-based departments/divisions

These regulators follow a horizontal
(narrow range of regulatory issues) structure, but they cover all the specific
service sectors that are regulated. Function-based departments/divisions have
responsibility for areas such as: administration and human resources;
enforcement; legal analysis; licensing; public relations; technical analysis
and development; research and market analysis; user/customer services; and
universal service fund administration.

For example, Chile’s Subsecretaria de
Telecomunicaciones (SUBTEL) is divided into seven function-based divisions:
Administration and Finance; Regulatory Policy and Market Analysis; Legal;
Concessions; Enforcement; Universal Access to the Information Society; as well
as a division for Strategic Planning, Management Control and Technological
Policy. Each of these divisions is subdivided into units that are responsible
for more specific topics. The Administration and Finance Division, for
instance, is subdivided into five units that are responsible for finance, human
resources, procurement, documentation, and a unit that handles information
(including claims and suggestions). The Regulatory Policy and Market Analysis
Division of SUBTEL is subdivided into three units, one for spectrum engineering
and administration, one for economic regulation, and one for strategic studies.19

Malaysia’s Communications &
Multimedia Commission (MCMC), a converged regulator, is also divided into
function-based divisions. They include: Industry Development; Regulatory State
Coordination; Technical; Resource Planning & Management; Monitoring &
Enforcement; and Management & Support Services. Similar to the Chilean
model, each of these divisions is then subdivided into topic-specific units.
The Regulatory State Coordination Division is subdivided into two departments,
one for regulatory coordination (which includes units for licensing and for
universal service provision) and the other for state coordination (which
includes a unit to manage regional office matters).20 Figure 5-E below identifies the organizational chart for Chile’s SUBTEL
showing how this regulator has divided responsibilities by function:

Some regulators combine aspects of
the industry/service and function-based structure models. The Canadian
Radio-television and Telecommunications Commission (CRTC) divides the
Commission’s responsibilities into the following departments/divisions:
Broadcasting; Telecommunications; General Counsel; Legal; Strategic
Communications and Parliamentary Affairs; Policy Development and Research; and
Compliance and Enforcement.21 The SIT of Guatemala distributes responsibilities among three main
departments/divisions: telecommunications; administrative; and legal.22 Figure 5-F provides a diagram of Canada’s CRTC showing how a regulatory
authority can combine both industry/service and function-based
departments/divisions within its organizational structure.

These regulators can be organized as
either industry/service-based or function-based departments/divisions, but they
have a horizontal structure because departments/divisions collaborate when a
project needs the support and expertise of various competencies.23 Morocco’s Agence Nationale de Réglementation des Télécommunications
(ANRT) is a function-based regulator divided into departments/divisions that
deal with technical, administrative and operator issues, but has as a
horizontal structure because staff members from units within these different
departments/divisions are, as a matter of course, brought together to work on
projects that require varied skills.24 The Malta Communications Authority (MCA) also utilizes a matrix
organizational structure that allows the regulator “to adapt to change and
maximize its expertise by shifting emphasis from a functional to a
project-based approach.”25 Figure 5-G shows a diagram of Malta’s MCA, showing how this function-based
regulatory authority uses a horizontal structure.

However, it should be pointed out that
regardless of the departmental/division structure of the regulators, it is
often the case that multiple departments and subunits will work together to
accommodate the evolving needs of the telecommunications market, as well as
facilitate and expedite internal procedures.

6.5.3 Administrative Structures: Staffing and Renumeration

The administrative structure of the
regulator, including staffing processes, the legal status of the staff,
remuneration principles, and the ability to contract outside consultants
provide key insights into the independence, depth of knowledge, and
impartiality of the regulator, as well as its ability to attract and retain
qualified personnel. By examining a regulator’s qualifications (for both
leadership and staff positions), we can discern the types of expertise present
among the regulatory leadership and staff, while the appointment and removal
processes for regulatory authority leaders can provide an indication of the
influence over the regulator wielded by other government agencies. The legal
status of the regulator's staff is an important indicator of the protections
afforded to the staff, particularly regarding liability for the decisions made
by the regulator, as protection from liability is an important consideration
for current and potential staff members. Analysis of remuneration principles
for both leadership and staff positions provides insight into multiple issues,
including the status afforded to the leadership and staff as compared to other
government employees and the flexibility afforded to the regulator to offer
salaries that will attract and retain qualified personnel. The ability of
regulators to contract outside experts is another important enhancement to the
regulator’s ability to act independently and efficiently, providing the
potential for impartial analysis, enhancement of capacity that is lacking
within the regulator, and solicitation of advice from concerned stakeholders.

6.5.3.1 Staffing Process (staff retention and resource development)

Qualification Requirements
for Heads of Regulatory Authorities

Most regulatory authorities are
empowered by laws or regulations that provide some guidance as to the
qualifications of the single regulator or collegial body members. Such
qualifications vary, ranging from specific disciplines for collegial body
members from various backgrounds to general requirements for relevant
expertise. For example, under Bulgaria’s Electronic Communications Law
promulgated in 2007, members of the five-member Communications Regulation
Commission (CRC) must be Bulgarian nationals with professional qualification in
the field of communications, information technologies, media, economics and/or
law.1

Qualifications for members of TRAI in
India are similar to Bulgaria’s current requirements—members of the TRAI must
have special knowledge of or professional experience in telecommunications,
industry, finance, accountancy, law, management or consumer affairs.2 However, Indian law also requires that members appointed from within
the Government previously must have held a high position in the Government.3

By requiring regulators or collegial
body members to have experience in certain professional sectors, an effort is
being made to ensure that the regulatory authority is led by individuals with
expertise beyond simply telecommunications. Regulators face issues involving
questions of law, finance, economics, trade, consumer affairs and security, in
addition to telecommunications; thus, it is important that such expertise be
reflected not only among the regulatory staff, but also among the regulator ’s
leadership.

The difference between, for example,
the former Bulgarian and current Bulgarian and Indian approaches is that
Bulgaria’s former membership of the CRC always included at least one lawyer and
one economist. One potential downside to this approach is that some countries
may find it difficult to find appropriately qualified candidates for the
specifically mandated positions. If, for example, the authorizing law requires
the presence of an economist and a qualified economist is not available, there
would be a vacancy among the regulatory authority leadership. This vacancy
might not only manifest itself in a lack of economic expertise, but could also
complicate decision-making by a collegial body that is a member short of its
intended size and/or which lacks a tie-breaking vote. On the other hand, while
the balance of areas of expertise among the members of Bulgaria’s current CRC
and India’s TRAI may fluctuate over time and lack certain areas of expertise
depending on the composition of the regulatory authority leadership, it also
provides for the flexibility to emphasize differing areas of expertise among
the regulatory leadership as the government, as well as market conditions and
other factors, influence regulatory priorities.

In addition to mandating specific
areas of expertise that the regulator must reflect and setting general
expertise qualifications, a third approach to determining regulatory authority
or collegial body qualifications is to avoid specifying any requirements regarding
expertise (e.g.,
Cameroon, Ecuador, Malaysia, and the United States).This approach provides greater flexibility than the Indian and Bulgarian
approach, by allowing the regulatory authority to be led by anyone appointed to
the task. While this approach certainly provides the most flexibility to
appoint regulators, it also opens the door to the possibility of appointing
unqualified regulatory authority leaders. However, in practice, it is unlikely
that a completely unqualified individual would be appointed to lead a
regulatory authority. In cases where appointees are selected by – or at least
recommended by – multiple branches of government, such as Ecuador and the
United States, it is improbable that multiple stakeholders would approve of an
unqualified appointee. Even in countries such as Cameroon and Malaysia, where
the regulatory authority leadership is appointed by a single branch of
government, the appointing authority runs the risk of not only negatively
impacting the telecommunications sector, but also the political risk of being
seen as having made an unwise appointment.

Table 5-5 provides an overview of the
advantages and disadvantages of the different approaches discussed above.4

Table 5-5: Advantages and
Disadvantages of Different Staffing Approaches

Approach

Advantages

Disadvantages

Require regulatory authority to
have specific areas of expertise (e.g.,
one attorney and one economist).

Ensures that certain areas of
expertise will always be represented among the regulatory authority
leadership.

Because the requirement is written
into law or regulation, regulatory authority has less flexibility to adjust
its composition in response to changing regulatory needs or market structure.
Some countries may face difficulty finding qualified individuals to fill the
mandated areas of expertise.

Require all regulatory authority
leaders to demonstrate expertise in at least one of several fields.

Ensures that all regulatory
authority leaders are well-versed in at least one of several relevant fields.

By not mandating which fields must
always be represented, regulatory authority retains some flexibility to
emphasize certain areas of expertise as necessary.

Greater likelihood that regulatory
authority leadership posts will not remain vacant due to absence of qualified
individuals.

The manner in which the head of the
regulatory authority is appointed provides important insight into the
independence of the regulator. Generally, if the head of a regulatory authority
is appointed by a single branch of government it is less likely to exhibit
independence than those who have the support of multiple branches of
government. For example, a collegial body may feature members selected by
different branches of the government, ensuring that no single branch has
excessive influence over the regulatory authority. In Bulgaria, for example,
the chair of the CRC is determined by the Council of Ministers and appointed by
order of the Prime Minister;, the deputy chair and two other members are
elected by the National Assembly, and one member is appointed by the President
of Bulgaria.5

In a 2000 report, the Organisation
for Economic Cooperation and Development (OECD) found that the majority of its
members were characterized by independent regulators that are led by an
individual or individuals appointed by the president or minister upon the
recommendation of the cabinet or minister.6 In addition, the legislature may be involved in approving the members
of the collegial body. For example, a nomination or appointment may be made by
the head of government or a minister and then confirmed or approved by another
government body (e.g.,
council of ministers, cabinet, or Senate). In the United States7 and Nigeria,8 the commissioners are appointed by the president of the country, but
require confirmation by the country’s Senate. In Portugal, the governing
ministry (currently the Ministry of Public Works, Transportation and
Communication) proposes board member candidates for the Autoridade Nacional de
Comunicações (ICP-ANACOM) and their appointments are made official through a
resolution issued by the Council of Ministers.9

An interesting example of the appointment
process is Colombia, which has a rotating leadership. The Comisión de
Regulación de Telecomunicaciones (CRT) is officially headed by the Minister of
Communications, who serves as the President of the CRT. However, the CRT is
also advised by a Committee of Commissioned Experts (Comité de Expertos
Comisionados) selected by the President of Colombia. Each year, this panel of
three experts elects one of its members to serve as the Executive Director of
the CRT for a one-year term. As such, the President of the CRT (the Minister of
Communications) is a member of the Government, and the Executive Director is an
expert who serves at the will of the President of Colombia.10

In addition to appointments
recommended by a cabinet or minister, regulatory authority leaders may be
nominated by other industry stakeholders. In Turkey, for example, the
Telecommunications Authority collegial body includes members who represent the
telecommunications sector and consumers. The member representing the sector is
selected from among candidates put forward by each operator who claims at least
10 per cent market share. The member representing consumers is selected from
among candidates nominated by the Ministry of Industry and Commerce and the
Turkish Association of Chambers and Exchanges.11

In the Dominican Republic, the head
of the five member board is appointed by the central government (i.e., the president), but
three members are nominated by various industry groups – one by the
telecommunications service providers, two by the broadcasting service community
(one nominated by the television networks and the other by the radio and cable
television networks), and the last member is selected, based on their
professional qualifications, to represent consumer interest groups. However,
the central government ratifies all nominations.12 In Uganda, seven commission members are appointed by the Minister with
the approval of the cabinet. However, five of the board members are appointed
based on a recommendation from each of the following institutions: the
Institution of Professional Engineers, the Uganda Law Society, the Broadcasting
Council (nominee must be a member of the council), and the remaining two
members are well-respected professionals chosen from the public. Similarly, the
legislation establishing the regulatory authority may require that the members
of the board represent the different regions of the country (e.g., Nigeria12).

By comparison, regulatory authority
heads that serve at the pleasure of the government – or the pleasure of one
particular branch of the government – may be viewed as less independent because
their job security is closely linked to one particular actor. Cases in which
regulatory authority heads are appointed by a single or limited group of actors
include Barbados14 and Indonesia.15 In Botswana, the Minister for Science, Communications and Technology
appoints all five members of the Board of Directors, including the Chairperson
of the Board.16

A variation of the view of such
appointees as less independent is when they are appointed by a figure outside
the government, such as a monarch. For example, the head of Morocco’s ANRT is
appointed by a royal decree and can only be removed from office by another
royal decree.17 In the case of Morocco, this arrangement theoretically confers a greater degree of
independence upon the ANRT’s director general with respect to the government,
because the director general serves at the pleasure of the king, rather than
the government or the prime minister. However, while the director general
enjoys a degree of independence from the government, he or she may still be
removed from office by the king at any time.

Fixed Terms

A large majority of countries mandate
fixed terms for the heads or members of the board of the regulatory authority.
Of the 85 countries that responded to the 2005 ITU Telecommunication Regulatory
Survey, 75 indicated that their regulators had fixed terms, with the majority
ranging between two and five years. The remaining 10 countries indicated that
no fixed term of office was specified in their laws or regulations.18 Similarly, a 2000 OECD report noted that most member states had fixed
terms for their regulatory authority heads.19 In some countries, like Bahrain, Panama and South Africa, the term can
vary depending on the position the person holds within the authority.20 In most countries, collegial body members can serve no more than two
consecutive terms of office.

Individuals with fixed terms of
office, particularly those that do not coincide with changes in government, are
likely to feel more secure in their position and exhibit more independence than
those individuals who serve at the pleasure of the government. Often the
applicable law or regulation indicates whether individuals can be reappointed
to a position after their term has expired. Much like term limits for
legislators and heads of state, it is debatable whether limiting an
individual’s tenure in a regulatory leadership position permits them more
freedom to act without regard for reappointment or forces qualified individuals
to give up their position due to an arbitrary regulatory or legislative
provision.

Removal from Office

Just as important as the appointment process and criteria in
establishing regulatory independence is the power of removal of regulatory
heads from office. Legislation or regulation often specifies the cases in which
a regulatory authority head or collegial body member may be removed from office
(such as conflict of interest or failure to perform official duties). For
example, in Canada, members of the Canadian Radio-television and
Telecommunications Commission (CRTC) must not have any direct or indirect role
in a telecommunications undertaking or business and may only be removed during
his or her term for good cause.21 Similar conflict of interest prohibitions
are common among telecommunications regulators.
For example, in Uganda, a member
of the Uganda Communications Commission may be removed if the officer 1) is
continuously and persistently unable to discharge the functions of the office;
2) engages in misbehavior or abuse of office; 3) is subsequently disqualified
from membership due to holding any interest in a telecommunications company,
bankruptcy or mental/physical illness that prevents performance of duties; or
4) fails to disclose to the Commission any interest in contract or proposed
contract or any other matter before the Commission.22 In some cases, conflict
of interest extends to cover the immediate family of the regulatory body
official, as is the case in Jordan where a board member of the
Telecommunications Regulatory Commission may be removed if the board member,
spouse or first-degree or second-degree relatives have a direct or indirect
investment in the ICT sector during the member’s term of office.23 In India, members of the collegial
regulatory body, TRAI, can also be removed from office for conflict of interest
reasons or for abuse of their position, although the Supreme Court must support
such a dismissal.24

In addition, it is not uncommon for
laws or regulations to specify that regulatory authority heads or collegial
body members can be removed from office for failure to commit appropriate time
to their duties. In Hungary, members of the Communications Regulatory
Commission’s collegial body are to be removed from office if they are unable to
carry out their duties continuously for more than 90 days.25 In Jordan,26 Sudan,27 and Tanzania,28 members of the collegial bodies can be removed from office for failure
to attend a minimum number of meetings. In India, for example, TRAI board
members may be removed from office if they fail to attend three consecutive
sessions or six non-consecutive sessions in one year without a reason
acceptable to the board. Similar to conflict of interest or abuse of power
rules, minimum attendance or participation rules increases the likelihood that
regulatory authority leaders are carrying out the job to which they were
appointed.

Some regulators also hold their
agency leaders to a high moral standard. In India, for example, members of the
TRAI can be removed from office as a result of offenses which are judged to
involve “moral turpitude” or as a result of a loss of mental or physical
function that prevents the member from fulfilling their duties.29 Similar moral qualifications are found in the laws and regulations
governing membership in the collegial bodies of telecommunications regulators
in countries including Brazil,30 Jordan,31 and Sudan.32

Legal Status of Staff

In the majority of cases, the staff
members of regulatory authorities are considered public employees (or other
similar terms, such as civil servant or public servant), making their
employment subject to the same rules applied to public employees throughout the
government.

In some cases, the head(s) of the
regulatory authority are also considered to be public employees for some or all
purposes. For example, the Canadian Radio-Television and Telecommunications
Commission Act specifically states that Commission members are public employees
for purposes of superannuation.33 All collegial body members and other employees of the TRAI in India are
considered public employees.34 Similarly, all members, officers, and employees of Singapore’s Infocomm
Development Authority (IDA) are considered public servants for the purposes of
Singapore’s penal code.35 The Singapore penal code includes statutes relating to crimes carried
out by public servants, as well as punishments for crimes carried out against
public servants and contempt for the authority of public servants.36 In cases such as Singapore, the explicit application of the penal code
to all IDA personnel is in line with the conflict of interest and abuse of
power rules previously discussed, stating that IDA members and staff are not
immune to the laws of conduct applicable to other citizens.

However, not all regulatory
authorities classify their employees as public employees. In Botswana,
employees of the BTA are considered parastatal staff in which the terms and
conditions of staff employment is determined by the board in the staff members’
respective contracts of employment.37 No other civil service rules apply to BTA
staff. In addition, as will be discussed below, the fact that BTA employees are
not classified as public employees provides the regulatory authority with
greater flexibility to offer competitive salaries and benefits. Although not
subject to civil service regulations, BTA staff is protected from liability for
actions taken in their professional capacities by principles of common law.38 Similarly, Singapore IDA personnel (including collegial body members,
officers and staff) are also protected from personal liability for actions
taken in good faith or to carry out the provisions of the IDA Act.39

In some jurisdictions, such as India,
the law specifically protects not only the personnel authority, but also
extends protection to the federal government and the authority itself from
liability for any actions carried out in good faith under the law or relevant
regulations.40 Despite the freedom conferred by such protections, some countries do
permit the assignment of liability to regulatory authority personnel. For
example, all personnel of Venezuela’s Comisión Nacional de Telecomunicaciones
(National Telecommunications Commission - CONATEL) are jointly and severally
liable under civil, penal and administrative law for the decisions undertaken
by the regulator.41 While such laws are likely intended to impress upon all regulatory
personnel the importance of taking the appropriate regulatory actions, they are
more likely to result in an overly conservative regulatory approach due to fear
of personal liability among authority personnel.

Protection from individual liability
is important to the functioning of a regulator, as it empowers regulatory
personnel to make their best efforts in support of the regulator’s goals, or
the duties assigned to the regulatory authority by applicable laws and
regulations, without fear of being held personally liable for adverse
consequences. This freedom is an important protection for employees (and
incentive for potential employees) who have an interest in contributing to the
effective regulation of the telecommunications sector, but who cannot afford
the risk of personal liability for regulatory actions. Protection from
liability for actions carried out on behalf of the regulatory authority is a
specific protection afforded to regulatory personnel; however, in certain
countries, such as Singapore, that protection does not confer immunity from all
criminal laws and rules of conduct upon all regulatory authority personnel.

6.5.3.2 Staffing Design

Many factors affect the staffing
design of a regulatory authority. Principally among these are market
conditions, established objectives and goals, scope of the regulator’s
responsibility, selected management structure, distribution of
responsibilities/duties within the regulator, and available resources.

In most cases, the head of the
regulatory authority is empowered by the applicable law or regulation to hire
appropriate staff as deemed necessary to conduct the business of the regulatory
authority provided such appointments are made within the confines of the regulator’s
budget. The hiring of staff for the regulatory authority also is usually
subject to national civil service or public employment laws or regulations.

Often the regulatory authority has
detailed requirements that it must follow when filling a vacancy within the
agency. India’s TRAI, for example, must fill each position by promotion,
deputation or direct recruitment, with specific guidelines laid out for each
method.1 Detailed regulations, such as TRAI’s, provide transparency to the
public, ensure that candidates are informed of selection procedures, and
facilitate the orderly internal process of hiring new staff.

However, the fact that regulatory
authorities may be empowered to hire staff does not guarantee an abundance of
qualified applicants. Regulators face significant challenges in recruiting and
maintaining qualified staff. First, they need to identify individuals with the
relevant expertise. Second, they must be provided by the government with the
resources to offer compensation packages that will attract such qualified
individuals. Third, they must be able to retain their staff members despite a
highly fluid sector in which technologies, business plans, and regulations
change with some frequency. Without addressing such challenges, regulators are
likely to face staff shortages and high turnover rates.

In general, telecommunications
regulators are composed of a diverse group of professionals that include:
attorneys, economists, engineers, market analysts, accountants, and
administrative support personnel. In addition, depending on the needs and
resources of the regulatory authority, some have provisions that allow them to
hire consultants on an “as needed” basis.

According to the results of the ITU’s
World Telecommunication Regulatory Database survey for 2010, telecommunications
regulator staff sizes range from three (Micronesia) to over 2,300 employees
(Germany).2 (See Table 5-6 below.)

Table 5-6: Lowest and Highest
Staff Size of Regulators per Region

Region of the World

Country

Staff Size

Africa

Namibia

7

South Africa

300

Americas

St. Lucia

5

United States

1,993

Arab States

Comoros

17

Egypt

429

Asia and Pacific

Micronesia

3

Korea (Rep.)

1600

Europe & CIS

Liechtenstein

6

Germany

2,238

Gender composition, a factor taken
into consideration by many human resources departments within telecommunications
regulators, shows that the number of male staff members is usually much higher
than that of women. According to the 2010 ITU World Telecommunication
Regulatory Database, 36 of the 149 (about 25 per cent) responding countries
indicated that their regulators currently have at least 50 per cent females on
their staffs.3 Notably, however, female staff members in an additional 39 countries
make up between 40 and 50 per cent of the total staff. As such, women comprise at least 40 per cent
of the total staff members in over half of the responding countries.4 The table
below (Table 5-7) shows those countries, per region, which have at least an
equal number of female and male staff members:

Interestingly, developing countries as
likely to have more equal numbers of female and male staff members within their
telecommunications regulators as developed countries. Overall, however,
Barbados has the highest percentage of female staff (84 per cent) while Saudi
Arabia and Micronesia have the lowest, with no women working at the regulator. (See
Table 5-8 for the lowest and highest percentages of female staff members by
region).5

Table 5-8: Lowest and Highest Percentage of Female Staff per
Region 5Region
of the World

Country

Percentage of Female Staff

Africa

Cape Verde

0.5%

Rwanda

60%

Americas

Belize

10%

Barbados

84%

Arab States

Saudi Arabia

0%

Tunisia

45%

Asia and Pacific

Micronesia

0%

Samoa

60%

Europe & CIS

Iceland

18%

Bulgaria, Kazakhstan, Ukraine

60%

The average age of employees is
another aspect of a regulator’s staffing composition. For the most part,
regulatory authority staff members around the world range from 25 to 65 in age,
with the 25 to 34 and 35 to 44 age groups being the most significant in number.
In Chile, for instance, SUBTEL’s staff of 236 employees had the following age
group composition in 2009 (Figure 5-H):6

Figure 5- H: SUBTEL Staff by
Age Group

Source: SUBTEL, Balance de Gestión Integral Año 2009

While the 45 to 50 age range is the
largest age group of SUBTEL employees, Romania’s ANCOM has perhaps a slightly
younger staff composition with nearly 40 percent of employees between the ages
of 31 and 40 years. (Figure 5-I):7

Figure 5- I: ANCOM Staff by
Age Group

Source:
ANRC Annual Report 2008

The academic levels of staff members
vary from one regulatory authority to another, but usually include: higher
education (university degrees such as Ph.D., M.A. and B.A. or their equivalents),
vocational/technical education, and high school education. As Figure 5-J shows,
of the 667 positions filled at Romania’s ANCOM, nearly 85 percent of employees
held a degree in higher education (i.e., college/technical school or
university). Of those with higher
education degrees the majority hold them in technical fields, as well as
economics, law and humanities.

Figure 5- J: ANCOM Academic
Level of Employees

Source:
ANRC Annual Report 2008

Telecommunications regulators usually
organize their staffs hierarchically. There are various levels including:
high-ranking management staff; professionals (which can have different levels
based on their expertise, as well as their degree of responsibility); technical
staff; administrative staff; and others, including consultants. It is not only
the hierarchical levels that differ between regulators, but also the
distribution of their staffs within each of these levels. For example,
ICP-ANACOM in Portugal has the following levels and distribution (Figure 5-K):8

Figure 5- K: ICP-ANACOM Staff
Organization and Ranking

Source:
Annual Report and Accounts, ICP-ANACOM 2009

In contrast, the Independent
Communications Authority of South Africa (ICASA) shows the following levels and
distribution of staff within them (Figure 5-L):9

Figure 5- L: ICASA Staff Organization and Ranking

Source:
ICASA Annual Report, 2009

These graphs show how two regulators,
with a somewhat similar hierarchical staff structure, can have very different
distribution of their employees. While almost 50 per cent of ICP-ANACOM’s staff
is upper/senior management and its semi-qualified professionals represent 30
per cent of the total staff, ICASA seems to have an inverted pyramid in
comparison, as its senior management is only 6 per cent of the total staff and
its administration staff members represent almost 60 per cent of all employees.

Staff members are commonly selected
based on their professional background, experience in the sector, and academic
accomplishments. Similar to other staff composition characteristics, this
distribution also varies among regulatory agencies. In the case of OSIPTEL in
Peru, the agency relies on lawyers, engineers and economists for 70 per cent of
its staff (Table 5-9):

Table 5-9: OSIPTEL Staff
Background

Source:
OSIPTEL Annual Report 2003

Professional Background

Total Number of Employees

Percentage(of total staff)

Accountants

11

8%

Attorneys

37

28%

Economists

23

17%

Engineers

32

24%

Other Professions

14

11%

Secretaries

15

11%

Total

132

100%

In Colombia, lawyers, engineers and
economists make up 82 per cent of the staff of the Comisión de Regulación de
Telecomunicaciones (CRT) (Table 5-10):

Table 5-10: CRT Staff
Background

Source: Jaime Andres Estrada, Commissioner, CRT (2005)

Professional Background

Total Number of Employees

Percentage(of total staff)

Administrative Support/Programmers

11

28%

Attorneys

11

28%

Business/Finance

3

8%

Economists

3

8%

Engineers

10

26%

Journalists

1

2%

The U.S. Federal Communications
Commission (FCC) shows the following distribution by profession, based on
respondents to the annual employee survey (Table 5-11):10

Table 5-11: FCC Staff
Background

Source:
2009 Annual FCC Employee Survey Results

Professional Background

Total Number of Employees

Percentage(of total staff)

Attorneys

185

31.2%

Clerical & Administrative Support

29

4.9%

Consumer Affairs & Consumer Outreach

28

4.7%

Economists

20

3.4%

Engineers

85

14.3%

Finance/Accounting/Auditing

31

5.2%

Information Technology

19

3.2%

Management/Program Analyst

58

9.8%

Specialist

78

13.2%

Other

60

10.1%

As shown above, the FCC, OSIPTEL, and
the CRT all rely heavily on attorneys, accountants, engineers and other
technical specialists. However, there
are no specific guidelines regarding the percentage of employees per profession
that should comprise a regulatory authority’s staff. The particular expertise
required is better determined by assessing the needs and upcoming workload of
the regulatory authority. In addition, the legislation establishing the
regulatory authority often allows the regulator to hire outside consultants and
experts if the need arises, as will be discussed in Section 5.3.5.

Another aspect that certain countries
consider regarding the staffing design is racial/ethnic diversity. In South
Africa for instance, ICASA strives to have a staff that reflects the
demographic diversity of its society (Table 5-12):

Table 5-12: ICASA Staff
demographics

Source:
ICASA Annual Report 2009

Race/Ethnicity

Total Number of Permanent Employees

Percentage(of total staff)

African

241

72%

Asian

17

5%

Colored

23

7%

White

54

16%

Total

335

100%

6.5.3.3 Job Descriptions

In general, most regulatory agencies include the following information on job descriptions:

§ key responsibilities and duties;

§ experience required;

§ qualifications/evaluation criteria;

§ special skills (if needed); and

§ how to apply (application instructions and procedures).

Some countries establish specific professional qualifications and background for members of the collegiate body (commissioners/board members) who are chosen on the basis of their knowledge and expertise in the communications field. They can come from both the public and private sectors and have different professional backgrounds (e.g., lawyers, economists, engineers, finance/accounting, academics, and government officials). In some countries, however, the professional background of the chairperson of the commission/board and some members is specified. In India, for instance, members of the TRAI can be drawn from a variety of fields, but the Chairperson must be, or should have been, a Supreme Court Judge or a Chief Justice of a High Court.1 In the Philippines, the National Communications Commission (NTC) consists of the Commissioner and two Deputy Commissioners, preferably one being a lawyer and the other an economist.2 In the United States, it is not only the professional background of the candidates that is taken into consideration when considering the composition of the commission, but also their political affiliation. Of the five FCC commissioners, no more than three can be of the same political party at any given time.3

Certain regulatory agencies, like the Telecommunications Regulatory Commission (TRC) in Jordan, have minimum requirements for professional applicants, regardless of the position for which they are applying. These qualifications include a degree from an accredited university, fluency in both English and Arabic (spoken and written), and knowledge of MS Office applications. They also must be Jordanian citizens.4 OSIPTEL in Peru also includes minimum requirements for professional applicants, among them: university degree (in specific field depending on the job position), experience, and an intermediate knowledge of English.5 Similarly, the Office of the Telecommunications Authority (OFTA) in Hong Kong includes entry requirements for professional candidates, such as: a Hong Kong university degree (or equivalent), fluency in English and Chinese (spoken and written), and knowledge of MS Office.6

Countries such as Canada, Dominican Republic, Nigeria, Panama and South Africa require that commission/board members be citizens of the country.7 In Panama and Peru, commission/board members must have at least ten years of experience in the telecommunications industry and a university degree (master’s degree equivalent) in order to be considered for nomination.8

For those regulatory agencies that provide job descriptions, the amount of information requested and/or provided can vary from the most general to the most specific. For instance, below is a sample of a job description published by the Commission for Communications Regulation (ComReg) in Ireland (Box 5-2): Box 5-2: ComReg Sample Job Description

Senior Legal Advisor

Reporting directly to the Commissioners, your prime responsibility will be to provide strategic, mission-critical legal advice to the Commissioners and the organisation, and to handle legal matters arising from ComReg’s remit and activities.

You will develop and implement strategies which result in the provision of well- rounded legal advice to senior management and to the organisation as a whole; oversee the full legal process, including court actions where necessary; and lead and manage ComReg’s relationships with external legal advisors. You will also act as a mentor to other lawyers working in the organisation.

The seniority of this position requires that you are a qualified solicitor or barrister with at least 10 years PQE, and have an outstanding professional record and reputation of providing excellent legal advice at the highest organisational levels. You will have a recognised expertise in competition and regulatory matters preferably relevant to the activities of ComReg - namely the electronic communications and postal sectors, and to demonstrate the ability to contribute effectively as a member of the senior management team.

ComReg is an equal opportunities employer.

In comparison, a job description published by the Infocomm Development Authority (IDA) in Singapore provides more detailed information with regards to the duties and requirements of the position (Box 5-3):

IT Infrastructure Project Manager

Responsibilities:

Involve in the design, management and enhancement of the corporate ICT infrastructure. Lead a small project or assist the Project Manager of a medium to large project, to conceptualise, develop and execute the project plan.

Responsible for the client computing, messaging, networking and server aspect of the projects from initiation to implementation. Study business and application specific requirements, review organisational ICT infrastructure as well as design and implement the ICT architecture to meet current and future requirements.

Manage the designated vendor and ICT contract to ensure the designated vendor meets contractual obligations, leading to successful delivery of the project.

Conduct ICT strategic review, identifying and exploiting suitable technologies, strategies and solutions to meet organization needs. Develop solutions / architectures based on technology trends and standards, to exploit new and emerging technologies and products to meet present and future business needs.

Manage the customer’s expectations, develop and actively engage customers so as to enhance customer intimacy and influence their alignment with the eGovernment agenda, and to achieve customer satisfaction.

5 - 6 years of relevant IT experience in designing and deploying enterprise level network and systems infrastructure (Experience in network security and/or development of IT Technical Architecture plans will be an added advantage)

Good knowledge of servers, network, IT security, desktop and ICT operations to effectively manage vendors

Experience in designing and managing enterprise infrastructure for application hosting

Excellent communication (both oral and written) as well as strong project, vendor and contract management skills

Certain regulatory agencies, such as OFTA in Hong Kong and the FCC in the United States, are even more explicit in the information they include in their job descriptions. OFTA, for example, indicates the term of the appointment (length of contract), newspapers in which the advertisement has appeared, and the policy for applicants with disabilities, among others.

The FCC indicates that it is an equal opportunity employer, whether a security clearance is required or not, whether relocation expenses will be covered or not, the policy for applicants with disabilities and preference in hiring veterans, and information that should be included in the curriculum vitae. In addition, FCC applicants must complete a Declaration for Federal Employment to determine their suitability to work for a government agency and to authorize a background investigation.9

Job descriptions for regulatory agencies can readily be found on most regulatory authority websites. However, many regulators do not provide specific job descriptions on their websites. Instead, they provide a description of the different departments/divisions of the regulatory authority and encourage those interested to submit their curriculum vitae for consideration.

The means used to hire employees in the regulatory industry vary from one regulatory authority to the next. For instance, in Nigeria and South Africa, telecommunications regulator employees are considered public/civil servants and as such are entitled to the same salary levels, pension and benefits as other public/civil servants.10 In Canada, employees of the CRTC are appointed in accordance with the country’s Public Service Employment Act.11

In Latvia, Peru, Philippines, and Poland, regulators support the professional advancement of their employees by encouraging their participation in specialized training courses, seminars, and workshops.12 For example, in an effort to prepare its employees for the country’s ascension into the EU, the URTiP in Poland organized capacity building courses in foreign languages, as well as courses focused on issues related to Europe’s integration.13 In Latvia, the Public Utilities Commission (PUC) supports efforts by its employees to further university studies at Latvian universities and sponsors employees interested in pursuing foreign language studies and in-service capacity building in regulatory institutions abroad.14

In Botswana, in addition to supporting employees’ interests in obtaining specialized training and pursuing university degrees, the BTA has established the Botswana Telecommunications Authority Staff Pension Fund and assists employees in obtaining personal, car, and home loans. The BTA has also established a performance management system with the objective of rewarding performance and encouraging productivity among its employees. This system also helps the regulator determine the training needs of its staff.15

In Senegal, employees of the Agence de Régulation des Télécommunications (ART) have access to a pension fund and are offered diverse bonuses and loans, as well as medical coverage and grants for mobile phone service and home remodeling. A capacity building plan has been developed to strengthen employee skills in various areas (i.e.g., management and technical) and training is carried out in Senegal and abroad. In 2004, the ART focused its capacity-building efforts on effective regulation to ensure that all staff involved had the same level of knowledge and understanding of the subject matter. In 2005, the agency focused its efforts on providing top management personnel with training, based on each individual’s needs, most of which was carried out abroad. Similar to the BTA in Botswana, the ART has established a performance management system that evaluates each employee’s annual performance based on their accomplishments and those areas where improvement is needed. Employees are awarded a year-end bonus (a maximum of 1.5 times their net salary) based on the results of this evaluation.16

Although various ways exist to engage employees and thus improve a regulator’s efficiency and effectiveness, establishing a performance management system - such as that in place in Botswana and Senegal - can ensure consistency in achieving a regulator’s objectives and goals.

Regulators must keep in mind that staff turnover is a business risk requiring management.17 A high turnover rate can be harmful as it can lead to lack of continuity and diminishes the ability to achieve the regulator’s goals and objectives. Therefore, regulators need to establish the measures necessary to create a working environment that will keep staff members motivated and enhance their desire to stay with the regulator. However, a low or non-existent turnover rate is not advisable either, as new employees can often bring new skills and insights with them, so measures should be balanced to also attract new employees to the regulator.

Regulators also should continually re-examine their organizational and administrative structures in order to be prepared for changes that may occur within it, as well as in the sector it regulates. Establishing a solid and well-prepared staff can be instrumental in helping a regulator manage internal and external changes in a successful manner.18 A regulator and its staff should aim to have the skills necessary to keep abreast of the needs and changes of the country’s telecommunications market sector and thus be able to respond to these changes in an independent and transparent manner.

6.5.3.4 Remuneration Principles

Remuneration for Leadership
of Regulatory Authority

Often, the compensation of regulatory
authority heads or collegial body members is lower than what could be earned in
equivalent executive positions in the private sector. As noted below, this also
presents a challenge regarding staff remuneration. However, particularly in the
case of leadership positions, it is not uncommon for regulators to be composed
of individuals who are less concerned about compensation than about some
combination of public service along with the experience, public exposure and
contacts that can be gleaned through a regulatory leadership position.

In several cases, the governing law
or regulation specifies the manner of compensation for the head(s) of the
regulators, with many reserving the right for the government or its appointed
representative to adjust salaries as necessary. A typical formulation is found
in Uganda’s Communications Act, which states, “The Chairperson and other
members of the Commission shall be remunerated upon terms that the Minister
shall approve.”1 Another common approach is for the salary of the regulatory authority
head(s) to be determined in the decree or other instrument of appointment, as
is the case in Jordan.2 Such arrangements provide a clear determination of who sets salaries,
but provides the flexibility for salaries to be adjusted as necessary by the
responsible party. For those regulators in which the board or commission
members serve part-time, they are often paid a per-meeting fee, as well as
reasonable expense reimbursement.

In some cases, however, the salaries
for the head of the regulatory authority or the collegial body members are set
by law, although not in explicit numerical terms. For example, the salary of
the chairman of the collegial body of Bulgaria’s Communications Regulation
Commission (CRC) is set at 90 percent of the basic remuneration of the
Chairperson of the National Assembly, while the salaries of the deputy chairman
is set at 95 percent of the basic remuneration paid to the CRC’s chairman and
remaining Commission members’ salaries are set at 90 percent of the CRC
chairman’s salary.3 Similarly, the collegial body members of Hungary’s are paid salaries that tied to the
compensation and benefits paid to permanent secretaries,4 Such arrangements serve the dual purpose of ensuring that the head of
the regulator’s salaries are adjusted in concert with legislators or senior
ministry officials, and imbuing the regulatory leadership positions with a
level of status on par with such senior government officials. The latter can
help to lend legitimacy to regulatory leaders, as well as to attract qualified
candidates. Directives regarding remuneration may also be linked to civil
service regulations, as is the case in the United States. By law, each member
of the U.S. Federal Communication Commission’s (FCC) collegial body receives a
salary at a particular level of the public employee pay scale.5

Remuneration for Staff

In countries where regulatory
authority employee salaries are tied to government-wide public employee
regulations, it is much more common for salaries to be lower than those offered
in the private sector. In such cases, the ability of the regulator to attract
qualified candidates can be stifled by the availability of higher-paying
private sector opportunities. Further complicating the ability to attract
qualified candidates, regulatory authority leaders may be required to obtain
permission to pursue additional paid employment, as is the case in Australia
(for full-time collegial body members),6 or simply prohibited from pursuing additional employment, as is the
case in the United States.7 Such restrictions are intended to ensure that employees devote their
full attention to their regulatory duties and to eliminate conflicts of
interest, but can also prevent candidates from obtaining additional income that
would help make up for the income forfeited when accepting a position at the
regulatory authority.

In an attempt to circumvent the
issues of low civil service salaries or restrictive civil service employment
regulations, regulators have attempted to design creative and attractive
compensation packages to attract experienced and qualified personnel. In a
study of the Botswana Telecommunications Authority, the ITU noted that at the
time of the study, the BTA offered an attractive set of fringe benefits and
salaries that were likely higher than those available in private sector
telecommunications jobs, as shown by the high number of private sector
applicants for BTA positions.8 In the case of Botswana, these fringe benefits combined with the fact
that civil service rules do not apply to the regulator, allowed the BTA to
offer competitive salaries and benefits to attract the most qualified
candidates. A similar arrangement is in effect in Singapore, where the IDA is
not required to adhere to the hiring, firing, and benefits practices in place
for most public employees, allowing the regulator more flexibility to offer
compensation packages that are more competitive with the private sector.9

In some cases, the non-leadership
staff compensation levels are based upon national public employee regulations
when regulatory authority heads are empowered to hire staff as necessary, as
long as they comply with applicable public employment laws and regulations.
Such is the case in the United States where the majority of the employees of
the FCC receive compensation based on a government-wide schedule of
compensation in which there are several compensation “bands” and multiple
levels within each band.10 In such cases, staff remuneration is adjusted in concert with other
public employees across the majority of government agencies.

6.5.3.5 Contracting of Consultants

Options for Contracting out
Services

Acknowledging that regulatory
authorities may sometimes be best served by contracting certain functions to
outside experts, many regulators are empowered to enter into contracts with
outside organizations for specific functions. It should be noted that such
outside experts may be private sector individuals or companies, but may also be
assigned to the regulator by other branches of government. A typical
formulation of the authority granted to the regulator is found in Bahrain’s
Telecommunications Law, which authorizes the Telecommunications Regulatory
Authority’s General Director (the head of the TRA’s staff) to employ such
consultants as will enable the TRA to meet its obligations under the Law, while
also taking budget considerations into account.1 Another arrangement is for the outside expertise to be provided by a
regional regulatory authority, as is the case in the eastern Caribbean states.
In that case, the Eastern Caribbean Telecommunications Authority (ECTEL) serves
its members as a shared regulatory body and provides specific expertise, such as
tariff reviews or impact assessment studies.2

In addition to hiring outside
experts, many regulators are also empowered to delegate their powers not only
to particular divisions within the authority, but also to outside experts. In
Singapore, the IDA is empowered to create committees for purposes which the IDA
feels would be better managed or regulated by a committee. Such committees may
be comprised of personnel from either within or outside the IDA, and the
regulator may delegate any of its authority to such committees, with the
exception of the power of delegation.3 The Australian Communications and Media Authority (ACMA) may also
delegate powers, but to a more limited pool of experts, namely those within the
ACMA or those made available to the ACMA by other government authorities.4 Other examples of regulators who may delegate some or all of their
authority are found in Bahrain,5 Hong Kong (SAR),6 India,7 and Tanzania,8 among others. The power to delegate provides the regulator with
additional flexibility to determine the most effective or efficient method for
regulation of any particular aspect of the telecommunications sector.

In addition to hiring outside
consultants and delegating authority, another method of outsourcing is the
establishment of advisory or consultative committees. Advisory committees are
generally comprised of interested parties or key stakeholders as identified by
the regulator. The advisory committee structure provides regulatory authorities
with outside expertise that can be drawn upon in the course of normal business,
but which are not employed to carry out a particular regulatory task or
empowered with any delegated authority role. Regulators empowered to employ
such advisory committees include Australia,9 Bahrain,10 Hong Kong (SAR),11 and the United States.12

Consultative committees generally do
not have the power to carry out actions on behalf of regulatory authorities.
However, they may provide valuable input to the regulators in devising
positions and strategies on domestic and international issues. In Hong Kong
(SAR), for example, the Office of the Telecommunications Authority (OFTA)
currently has advisory committees addressing radio spectrum, numbering,
technical standards, regulatory affairs and consumer issues.13 All five Hong Kong (SAR) committees provide advice on domestic issues,
while the spectrum and standards committees also assist OFTA in the formation
of positions and inputs to international fora. Similarly, the U.S. FCC
currently has eight advisory committees, including committees on consumer
issues, diversity, media security and reliability, network reliability and
interoperability, and numbering.14 The Australian ACMA provides a standard formulation of the authority to
establish advisory committees, in which it states, “[t]he ACMA may, by writing,
establish advisory committees to assist in performing any of its functions,”
and furthermore the ACMA holds the authority to appoint the committee members
as well as revoke membership, and provide the committee with specific
instructions.15

The ACMA Act also notes that
committee appointments are not appointments to public office under the terms of
Australian law governing remuneration, which brings about another common
feature of advisory committees: members are not paid by the regulatory
authority for their service. Instead, they provide input to the regulator in
order to shape regulatory decision-making, whether for the good of the
telecommunications market as a whole or for the good of the stakeholder(s) that
they represent.

Reasons for Outsourcing

As more regulatory authorities have
been established or reorganized in recent years, outsourcing certain regulatory
functions has served as a means for the regulators to perform their duties
while building internal capacity and ultimately minimizing the need of outside
experts. In the cases of Bahrain and Uganda, a consulting firm was contracted
to carry out many of the functions of the regulators as they developed their own
internal competencies, which helped to get the regulators quickly functioning
after their establishment. In other cases, it may be that a
particular staff competency is currently lacking and the regulator determines
such a role is better filled by an outside consultant. For example, in the
Cayman Islands, an outside consultant was hired to serve as general counsel.

In both of these cases, the
deployment of external resources in a regulatory authority can be coordinated
so as to maximize opportunities for knowledge transfer. In particular,
consultants and regulatory authority personnel can be integrated into teams
that address weaknesses in the authority’s capabilities. Such arrangements
provide opportunities for the regulatory authority personnel to become more
familiar with the relevant issues and stakeholders, and to learn from the
consultants how best to address such issues. In order to maximize the potential
for knowledge transfer, regulators employing external resources should consider
three primary factors, and at different phases of the integration:16

Traits of the consultant or
expert, such as perceived reliability and motivation, which are
important to ensuring successful transfer of knowledge at the initiation of any
such collaboration;

Traits of the recipient, such
as ability to absorb knowledge, which affects how well the authority personnel
will employ the knowledge gained;

Level of understanding of subject
matter, which can affect the effectiveness and difficulty of
knowledge transfer at all times.

As the knowledge transfer process continues and regulatory
authority personnel are better able to take on the roles initially assigned to
consultants, the authority gains the freedom to redeploy the consultants in
other areas in which their skills may be needed.

Regulators, both established and new,
may also choose to outsource certain functions not because they lack the
internal capacity, but because such functions may be best provided by outside
experts. In this respect, outsourcing regulatory functions is similar to the
outsourcing of business functions: focused on functions and processes that have
been problematic and have led to dissatisfaction.17

It is also not uncommon for
regulators to contract outside experts on an ad hoc basis for specific
short-term needs. For example, regulatory authorities commonly outsource parts
of tender processes, such as the development of terms of reference, feasibility
studies or evaluation of bids. In Botswana, the regulator employed consultants
in 2004 to assist in the evaluation of bids to procure an automated frequency
management and monitoring system. Similarly, regulators have engaged the
services of consultants to assist in bid evaluation for mobile licence tenders
in many countries, including Jordan and the Maldives.

In addition to providing a competency
that the regulator may lack, the employment of impartial external analysts for
tasks such as bid evaluations may help to avoid conflict of interest issues in
environments where the regulator is populated by individuals with close ties to
or histories with bidders. This concern extends beyond bid evaluation to any
issue for which there is reason to suspect that the regulator may not be able
to make an impartial decision, or to cases in which the regulator’s actions
would be further legitimized by being based on external analysis and
evaluation.

While not quite on an ad hoc basis,
outside experts can also be contracted to address short term needs in
conjunction with a particular project. For example, a concession contract may
include a provision requiring outside consultants to monitor adherence to the
terms of the contract or to ensure the quality of the service being offered by
the concessionaire. Furthermore, outside experts often have established
networks of expert contacts that enable them to gather relevant information and
best practices in a more effective and efficient manner than a regulator,
particularly a new independent regulator.

On an operational level, it is also
not uncommon for regulatory authorities to outsource certain other functions,
such as security, maintenance and cleaning, as well as employing outside
contractors to fill temporary staff vacancies or to recruit support personnel.

Outsourcing can also involve
different types of deliverables from the outside experts. In some cases,
consultants provide a set of key issues and potential options for the regulator
to take, but leave the ultimate decision up to the regulator. In other cases,
the consultant may be offered the opportunity to provide binding
recommendations that the regulator has no choice but to implement.

Outsourcing can be a useful tool,
allowing regulators to act more independently and efficiently, providing
impartial analysis of key issues or processes, and augmenting the regulator’s
own capacities (or lack thereof). Seeking advice from concerned stakeholders
provides the regulator with important insights into the current state of the
telecommunications sector as well as the possibilities for its future.

6.5.4 Legal Status of Regulatory Authorities

The legal status of the regulatory
authority is a product of the political and legal system of each country.
Most regulatory authorities are either public or semi-public institutions,
although some regulatory bodies are established as corporate bodies.1

6.5.4.1 Corporate Body vs. Administrative Body

The legal status of the authority is
generally based on providing the most appropriate organizational structure in
order to ensure consistency with the legal and administrative framework of the
country. Portugal and Austria are two examples of countries that
structured their regulatory authority as a corporate body instead of as an
administrative body. In Portugal, the new statutes of the Instituto
das Comunicações de Portugal (ICP) changed the previous legal status of ICP
from a public institute to a public corporation named ICP-AUTORIDADE NACIONAL
DE COMUNICAÇÕES (ICP-ANACOM) endowed with administrative and financial
autonomy, as well as its own assets.1 This new legal form was intended to enhance the powers and
procedures of the regulator and to provide greater legal and financial
flexibility through its regulatory instruments. In practice, the change
of legal status had an impact on the internal administration of ICP-ANACOM
because the Board was granted more flexibility with regard to internal
administrative matters, including salaries of the Board Members and staff, the
internal organization of the Institute and procurement of goods. However,
the budget is still approved by the Ministry of Public Works, Transportation
and Communications and the members of the Board of Administration are appointed
by resolution of the Council of Ministers, upon a proposal from the member of
government responsible for communications. In terms of regulatory
functions, ICP-ANACOM has wide-ranging powers, with the Ministry responsible
for the establishment of licence fees. ICP-ANACOM, however, must
coordinate with other entities as follows:

Numbering Plan:
The member of government responsible for the communications sector
approves the guidelines and general principles of the national numbering plan
and then ICP-ANACOM administers the plan and grants the numbers.2

Tariff approval:
The pricing system of the provision of universal service is established
through an agreement signed between the central government, represented by the
Department of Commerce and Competition (DGCC), ICP-ANACOM and the organization
with universal service obligations.3

Frequency allocation:
ICP-ANACOM must coordinate with the sector ministry which is responsible
for public tender procedures.4

In Austria, the independent regulator
(RTR GmbH) is also a corporate body – specifically, a private sector,
non-profit, limited-liability company, and 100 per cent of its shares are owned
exclusively by the Austrian federal government. These shares are
administered by the Federal Chancellery in cooperation with the Federal
Ministry for Transport, Innovation and Technology. RTR’s share capital
totals €5,741,153.90 and was solely contributed by the federal government. Additional
financing of the regulatory authority is governed by law, and inflows of funds
include licence fees and financing amounts contributed by telecommunications
providers operating in Austria. RTR’s regulatory activities with regard
to broadcasting are financed by contributions from broadcasting organizations
located in Austria.

RTR is in charge of running the
day-to-day regulatory business and also acts as the managerial unit of the
Austrian Communications Authority (KommAustria – the broadcasting regulator)5 and the Telekom Control Commission (TKK, which acts as the judicial arm
of the regulator.)6 The members of the RTR Advisory Board are appointed by the
Austrian Federal Ministry of Transport, Innovation and Technology and by the
Federal Chancellery. RTR is split into two specialized sections
(broadcasting and telecommunications) and has fairly typical functions and
duties of a telecommunications authority.

Since October 1, 2010, KommAustria
has also been responsible for legal supervision of the Austrian Broadcasting
Corporation (ORF) and its subsidiaries, for the legal supervision of private
providers of audiovisual media services on the Internet, and for certain tasks
under the Austrian Act on Exclusive Television Rights.7Thus, in practice, regulators legally established as corporate
bodies appear to function in much the same way as regulators which are
administrative bodies in terms of reporting lines, budget and internal
administration.

6.5.5 Ethics Rules and Conflicts of Interest

A major component of effective and transparent telecommunications regulation is the management of conflict of interest issues between private interests and public service duties.1 Regulators must be fair, impartial and transparent, and just as importantly, the public must perceive them as such in order for the regulators to inspire confidence of the industry and of investors. For instance, in order to maintain the public confidence and address the conflict of interest over the roles of the Telecom Regulatory Authority of India (TRAI) as a regulator and an adjudicator, TRAI amended the telecommunications legislation in 2000 to create an independent Telecom Disputes Settlement and Appellate Tribunal (TDSAT), transferring to it all powers for dispute resolution in the sector. (For a more detailed analysis, see the practice note on the case of India in Section 7.4.1 in the online module.) The ability of a regulator to govern legitimately and effectively is based on the real and perceived integrity, honesty and ethical behavior of its officials and employees and their decisions. Thus, it is necessary for regulators to implement an ethics framework to govern the activities of their employees and ensure the adherence to minimum standards of professional and ethical behavior. Box 5-3 below provides an example of the core values of civil service for Hong Hong (SAR).

At the heart of any ethics framework is the prevention of conflicts of interest, which can jeopardize the ability of a regulator to make an objective and transparent decision. One way to establish the core values and standards of conduct that should govern public service is to adopt and enforce a code of ethical conduct that binds all employees. A code of ethics can be part of a more comprehensive administrative code, such as the United Kingdom’s Civil Management Code,3 or it can be promulgated as separate legislation, such as Canada’s Conflict of Interest and Post-employment Code for Public Office Holders.4 Other regulators, such as Bahrain’s TRA, include conflict of interest provisions in the telecommunications legislation. In general, the ethics codes for the public service sector in most countries serve as general ethical guidelines for all government agencies, including independent regulatory entities, although different departments, agencies and regulators may develop supplemental guidelines to take into account their specific functions and circumstances. Ethics codes can vary in content, but should generally address the following:5

Establishing provisions for disclosure of personal and financial conflicts of interest (which include provisions regarding gifts, impartiality in performing official duties, and seeking outside employment);

Rules for maintaining confidentiality of information;

Setting procurement rules;

Rules on staff relations (such as prohibitions on sexual harassment);

Establishing methods to report and handle misconduct and what the proper grounds are for disqualification or dismissal; and

Safeguarding agency assets through rules on spending and financial reporting.

Generally, ethics rules prescribe four approaches to avoiding or mitigating ethical conflicts, whether real, potential or apparent: (1) avoidance, (2) disclosure, (3) divestment or resignation, or (4) recusal.6 A code of ethics may encourage employees to take precautions to avoid situations that may result in a potential conflict of interest or give the appearance of impropriety. For example, the Hong Kong (SAR) Civil Servant’s Guide provides the following guidelines: “avoid being placed in a position of obligation to anyone by accepting excessive entertainment or favors” and “avoid putting yourself in a position that may arouse any suspicion of dishonesty, or of using your official position to benefit yourself, your family, relations or friends.”7 Employees are also typically required to disclose any conflicting financial interests or personal interests or the receipt of any gifts over a certain monetary value. Where a conflict of interest is identified, the employee may be asked to resign or to divest the conflicting interest. Another resolution may be the recusal, the disqualification or removal, of the employee from the particular matter that involves a conflict of interest. The Organisation for Economic Co-operation and Development (OECD) provides guidelines in dealing with conflict of interest situations (Box 5-4).

The main issues regulators encounter regarding ethics can be grouped into three broad categories: (1) acceptance of gifts; (2) personal and financial conflicts of interest; and (3) post-employment prospects.

Most recently in 2009, immediately upon inauguration, United States President Barak Obama issued an Executive Order requiring that every appointee in his Administration adhere and commit to an ethics pledge.8 The pledge includes bans on accepting gifts from lobbyists or lobbying organizations for the duration of service as a political appointee as well as restrictions on communications with employees of the former government agency.9

6.5.5.1 Acceptance of Gifts

Most ethical codes of conduct
prohibit the improper acceptance of gifts between employees or from outside sources, which can influence the independent judgment and performance of
official duties of a public employee to the benefit of the gift giver.1 In almost all countries, civil employees cannot solicit and must
decline any gifts, hospitability or other benefits from persons dealing with
the agency that give rise to impropriety or the appearance of impropriety,
which could influence them in their personal judgment and integrity.2 For example, the Charter for the Public Service in Africa, which serves
as a policy framework for public service administrations of African countries
and as a source of inspiration for the development, strengthening or updating
of national codes of conduct, states that: “Public service employees shall not
solicit, accept, demand or receive, directly or indirectly, any payment, gifts
or other advantage in kind in return for performing or refraining from
performing their functions or obligations. It shall be reprehensible for public
service employees to offer gifts or other advantages that might influence in
their favor or in favor of family members and friends, the judgment or decisions
of another person.”3

Where it is impossible to decline a
gift, there are different ways to handle it, such as disclosing the gift and
reporting the gift to one’s supervisor immediately,4 returning the gift or paying its market value,5 or obtaining permission prior to accepting the gift.6 For example, in Hong Kong (SAR), civil employees are required to seek
permission from an authorizing officer before accepting or soliciting any
prohibited gifts, and the approving authority may either allow the acceptance
or solicitation of the gift unconditionally or subject to certain conditions,
or refuse permission. If the gift is already in the civil employee’s
possession, the approving authority may (i) require the gift to be returned to
the donor, (ii) require the gift to be donated to a charitable organization, or
(iii) require the disposal of the gift in such other manner as the approving
authority may direct.7

The practice of gift-giving is common
in building and maintaining business or personal relationships, and may not
always constitute bribery, so it is important to clearly define the difference
between token niceties and outright bribery or influence-buying. Therefore,
rules regarding the acceptance of gifts usually contain certain exceptions to
account for local customs, for gifts below a certain monetary value, or for
situations where acceptance of gifts is permissible. Differentiating between
token gifts and improper bribes can be done in several ways:8

1.
By a general rule prohibiting any
gifts, invitations or courtesies;

2.
By establishing situational guidelines
on acceptance of gifts (e.g.,
whether there is an impending hearing involving the giver or whether acceptance
may be justified on policy grounds, such as to fund or pursue training or
developmental programs);

3.
By setting guidelines on the nature of
the gift (e.g.,
meals or invitations to ribbon-cuttings may be acceptable, while leisure resort
weekends or substantial cash payments would be forbidden);

4.
By imposing ceilings on the value of
the gift; or

5.
By requiring the declaration and
registration of all gifts in a central register.

In Brazil, public service employees
are prohibited from receiving a salary or any other prohibited remuneration
from a private source, or receiving any means of transportation, lodging or any
favours that could generate doubts as to the employee’s honesty or integrity.
However, the public service employee’s participation in seminars and
conferences is permitted provided that the information on any financial
compensation and/or payment of travel expenses by the event promoter, who must
not have a personal interest in any decisions made by the employee, is
disclosed. Additionally, items are not considered gifts if they do not have any
commercial value, or they are distributed by an entity as courtesy, for
publicity purposes, as a customary public affairs matter, or on the occasion of
a special event or commemorative date, and do not have a value of over BRL 100.9

In the United States, exceptions to
the acceptance of gifts under the Standards of Ethical Conduct for Employees of
the Executive Branch include, among others: (i) gifts with an aggregate market
value of USD 20 or less, provided that the total value gifts received from the
same person does not exceed USD 50 in one calendar year; (ii) gifts based on a
personal relationship, such as a friend or family; (iii) awards and honorary
degrees, other than cash or an investment interest, with an aggregate value of
USD 200 or less if such gifts are a bona fide award given for meritorious
public service or achievement; and (iv) discounts and similar benefits given to
all government employees.10

In Hong Kong (SAR), acceptance of
gifts (advantages) is permissible for: (i) gifts, discounts, loans of money or
passages from tradesmen, companies or other organizations which are available
on equal terms to non-civil servants; (ii) gifts, discounts, loans of money or
passages from a relation; (iii) gifts and/or passages not exceeding in total
HKD 2,000 from a close personal friend or HKD 1,000 from any other person on
each occasion when gifts are traditionally given or exchanged, and not
exceeding HKD 400 in total from a close personal friend on each other occasion;
and (iv) loans of money from a close personal friend or any other person not
exceeding HKD 2,000 and HKD 1,000 respectively, provided it is repaid within 14
days.11 Additionally, acceptance of entertainment, which is defined as the
provision of food or drink, is not considered an advantage, and is not a
criminal offense. However, a public service employee is advised to refuse
lavish or unreasonably generous or frequent entertainment that might result in
embarrassment in performing one’s duties or bring the public service into
disrepute.12

In addition to ethics rules adopted
by regulators, many countries also have laws against bribery of government
officials. The Canadian Criminal Code states that: “…every one commits an
offense who being an official or employee of the government, demands, accepts,
or offers or agrees to accept, from a person who has dealings with the government,
a commission, reward, advantage or benefit of any kind directly or indirectly,
by himself or through a member of his family or through any one for his
benefit, unless he has the consent in writing of the head of the branch of
government that employs him or of which he is an official, the proof of which
lies on him.”13 In the United States, under the Foreign Corrupt Practices Act (FCPA),
it is unlawful for U.S. persons to bribe foreign government officials to obtain
or retain business.14 In Hong Kong (SAR), under the Prevention of Bribery Ordinance, which is
enforced by the Independent Commission Against Corruption (ICAC), it is
considered a bribery and an offense for public officials to solicit or accept
any gifts offered as an inducement to or reward in connection with the
performance of their official duty, and it is also an offense for any person to
offer such gifts.15

In some countries, specific local
practices are prohibited. For example, the Hong Kong (SAR) Civil Servants’
Guide also notes that the red packet (hong
bao), traditionally given during Chinese New Year, is a gift of
money and is considered a prohibited advantage under Section 4 of the
Prevention of Bribery Ordinance, unless it is between family relations.16 The Kenya Public Officer Ethics Act 2003 explicitly prohibits the
solicitation and collection of harambees.17 In Kenya, harambee,
which means “pulling together,” is a local practice that entails voluntary
contributions in cash and in kind, such as labour, for community activities and
projects such as schools and health clinics, and is considered to predispose
people, particularly politicians, to corruption because it provides a means for
people who steal public funds to legitimize themselves to the public.18

6.5.5.2 Personal and Financial Conflicts of Interest

Another major consideration in
establishing a code of ethical conduct is the conflict of interest arising from
an employee’s pecuniary interests, personal affiliations and family relations.
A conflict of interest is likely to arise when a public office employee’s
loyalty to the government conflicts with his loyalty to: (a) family and other
relations; (b) personal friends; (c) clubs and societies to which they belong;
(d) professional colleagues in the private sector; or (e) any person to whom
they owe a favor or are obligated in any way.1

Common examples of such conflicts
include an employee’s participation in proceedings that involve close
associates or family members (nepotism), an employee’s stockholdings in
companies that have dealings with the employee’s agency, or stockholdings in
companies that the employee has gained confidential information through
official capacities.2 For example, the Brazilian telecommunications regulator Anatel’s
internal administrative regulations prohibit the agency’s employees from
participating in administrative procedures in instances where they: (i) have a
direct or indirect interest on the subject matter being acted upon; (ii) have
participated or may participate as an expert, witness or representative, or if
such situations involve a spouse, relative or relative in the third degree of
consanguinity; or (iii) are in judicial or administrative litigation with the
interested party. Anatel employees who find themselves in one of the above
situations must communicate this information to their superior and abstain from
participating in the procedure. Employees may be subject to investigation if
there is suspicion that they have intimate friendship or enmity with any of the
interested parties or their respective spouses, companions, or relatives up to
the third degree of consanguinity.3

Similarly, Peru’s telecommunications
regulator, OSIPTEL, issued a Transparency Regulation that governs transparency
in the agency’s procedural and administrative activities and in the activities
of its employees. Article 7 of the Regulation requires that OSIPTEL directors
or employees who have decision-making powers or whose opinion on the substance
of the proceeding can influence the decision at issue, shall abstain from
participating in activities in the following instances:4

1.
If their participation can affect their
own economic interests, or the interests of their spouse or family member up to
the fourth degree of consanguinity or second degree of affinity;

2.
If their participation can affect the
economic interests of their partners, organizations, companies or groups of
which they are a member;

3.
If their participation can affect the
economic interests of individuals or legal entities with whom they are seeking
employment;

4.
If they are a family member to the
fourth degree of consanguinity or second degree of affinity with any of the
other parties or their representatives, or the other party’s management staff;

5.
If they have acted as advisor, expert
or witness in the same proceeding, or if they have taken a stand on the issue
at hand, except if their manifestation on the matter involved the correction of
an error or the appeal of the decision; and

6.
If they have worked in the past year
with any of the other parties directly involved in the proceeding or have
participated in any project with any of the other parties regardless of whether
the project was actually carried out.

To avoid conflict of interest, many
regulators also prohibit their employees from holding shares in companies that
they regulate. For example, the Romanian Telecommunications Law prohibits the
regulator’s employees, including the president and vice-president, from having
shares or participating as board members in any company under the regulator’s
competence.5 Similarly, the Telecommunications Act of the Independent Communications
Authority of South Africa (ICASA) disqualifies persons from being a councilor
if they or their family members have a substantial financial interest in the
telecommunications or broadcasting industry, or if they or their business
partners are employed by any person or entity in the telecommunications or
broadcasting industry.6 The Kenya Public Officer Ethics Act prohibits a public office employee
from holding shares or any interest directly or indirectly, in a corporation,
partnership or any other body, which would result in a conflict of personal
interests with official duties.7 Such conflicts of interest must be reported and the employee must
refrain from participating in any deliberations with respect to the matter.8 The Act also prohibits the practice of nepotism or favouritism.9

Civil employees should not take
advantage of their positions to further their own private interests, nor should
they allow private interests to conflict with their public position. Conflicts
may arise when employees use confidential information obtained in the course of
employment to further personal interests. In Canada, for example, public office
employees are not permitted to give preferential treatment in relation to any
official matter to relatives or friends, or to any organization in which they,
relatives or friends have an interest, nor are they allowed to use information
obtained in their position as a public office employee that is not generally
available to the public to further their own or any person’s private interests.10

Ethics legislation in most countries
also mandates the disclosure of financial and personal interests and even the
divestment of such interests in order to prevent personal or financial
interests from influencing the independent judgment of a civil employee. The Kenya
Public Officer Ethics Act, for example, requires every public employee to
annually declare their income, assets and liabilities, as well as those of
their spouse(s) and dependent children under 18 years of age.11 In Canada, other than “exempt assets,”12 public office employees must declare and/or divest themselves of
“controlled assets,” which are those assets that could be directly or
indirectly affected as to value by government decisions or policy in which the
employee’s agency has some role.13 Public office employees are also prohibited from participating in
outside activities and employment that could impact their ability to perform
their official duties and responsibilities objectively.14

6.5.5.3 Post-employment Prospects

Regulatory provisions regarding
post-employment prospects are intended to prevent any suspicion that the public
office employee’s duties and decisions might be influenced by the expectation
or hope of future employment with a particular firm or organization, and to
avoid the risk that a particular firm or organization might gain improper
advantage over its competitors by employing someone who had access to
information on the competitor through the course of their prior official
duties.1 In order to prevent conflicts between the employee’s current
responsibilities and outside employment, ethics regulation typically require
employees to report any outside appointment if there is a potential conflict,
such as when an employee had significant contacts with a company while in
office, or if the company was a party to the matter that the employee’s
department was in charge of handling.2 In addition to reporting requirements, former employees may be required
to either avoid certain proceedings or obtain permission from a former employer
prior to taking a new appointment for a specified time period after termination
of employment.

In Brazil, the members of the Board
of Directors of the telecommunications regulator Anatel have a four month
“quarantine” period (quarentena)
before they can undertake a new position after termination of employment if the
Public Ethics Commission finds that there exists a conflict of interest between
the employee’s former appointment and his new position.3 Pursuant to Article 13 of the Code of Conduct for Senior Government
Officers, any proposals of future work or business in the private sector as
well as any negotiations for work that may involve a conflict of interest must
be communicated immediately to the Public Ethics Commission, regardless of
whether it was accepted or rejected. Article 15 of the Code states that in the
absence of a law specifying a different period of time, there shall be a
four-month period beginning from the date of their departure from public
service, during which former public service employees are barred from
performing any activity that is incompatible with the office held previously.
Within this period, former public service employees must comply with the
following rules: (a) they may not accept any position as a manager or
counselor, or establish professional relationships with an individual or legal
entity with which they had previously maintained a direct official and relevant
relationship within the last six months prior to their departure from public
position; and (b) they may not interfere for the benefit of, nor on behalf of,
any individual or legal entity, before any federal government entity or agency,
with which they had a direct and relevant official relationship during the last
six months prior to their departure from a public position.4 In addition, the Telecommunications Law prohibits the former Board
member from representing any person or interest before Anatel for a period of
one year after termination of employment.5

The United Kingdom’s Civil Service
Management Code provides that under specific circumstances, within two years of
leaving government service, civil employees must file an application pursuant
to the Business Appointment Rule and obtain government approval before taking
any full-time, part-time, or fee-paid employment in the United Kingdom or
overseas in a public or private company or in the service of a foreign
government or its agencies. Such specific circumstances requiring government
approval include: (i) if the employee is at a senior level; (ii) if the
employee has had any official dealings with the prospective employer during the
last two years of employment or if they had official dealings of a continued or
repeated nature with their prospective employer at any time during government
employment; (iii) if the employee has had access to commercially sensitive
information of competitors of the prospective employer; or (iv) if the
employee’s official duties during the last two years of government employment
involved giving advice or decisions benefiting the prospective employer for
which the offer of employment could be interpreted as reward, or have involved
developing policy, knowledge of which might be of benefit to the prospective
employer. All civil service employees are required to report if they are
considering any approach from an outside employer offering employment. Civil employees
dealing with procurement or contract work must report any offer of outside
employment whether or not they are considering the offer. The government’s
approval of an application under the Business Appointment Rule can be: (i)
unconditional; or (ii) conditional subject to a waiting period before taking up
the new appointment; or (iii) include a ban on the involvement of the applicant
in dealings with the prospective employer and the government or with
competitors of that employer.6

Canada’s Conflict of Interest and
Post-Employment Code for Public Office Holders requires that before leaving
office, all public service employees must disclose in writing to the Ethics
Commissioner all firm offers of outside employment that could place the
employee in a position of conflict of interest, and any employee who accepts an
outside offer must disclose in writing the acceptance of the offer. If the
employee is engaged in significant official dealings with the future employer,
the employee will be removed from their current duties and assigned to other
responsibilities immediately. Within one year of leaving office, or two years
for ministers of the Crown or ministers of state, employees are prohibited from
accepting service contracts, appointments to a board of directors of, or
employment with an entity with which they had direct official dealings during
the one year period preceding the termination of employment, or to represent an
entity in front of a department that they had direct and significant dealings
with during public office.7 Additionally, employees who have official dealings, other than dealings
consisting of routine provision of a service to an individual, with former
public office employees who are or may be governed by the post-employment
compliance measures of the Code must report those dealings to the Ethics
Commissioner.8

6.5.6 Accountability of Regulators and Judicial Review

The accountability of regulators can be
monitored by implementing regulatory transparency and reporting regulatory
activities to the government. Additionally, the regulator is also accountable
to the public whose interests are affected by the regulator’s activities, so
adequate mechanisms should be implemented to educate and protect consumers, and
allow consumers to voice their opinions and concerns with the regulator. This
section will provide an overview of different approaches to ensure the
accountability of regulators.

Parliamentary oversight and
judicial review

The accountability of regulators is
determined by various factors, but principally by the organizational structure
of the regulator and its place within the governmental structure. In many
cases, telecommunications regulators report administratively to sector
ministries or other governmental agencies.1 (See Figure 5-M below on Reporting Requirements.) Accountability can be
facilitated if regulators adopt internal procedures to guarantee transparency
in their activities (such as ensuring an open and participatory decision-
making process through public consultations, as discussed in Section 7.2) and
staff accountability, and by fulfilling obligations to report to the
legislature which provides external control. Additionally, most
telecommunications regulators have the obligation to provide annual reports to
Parliament or other executive branch entities such as ministries. According to
a recent ITU survey of 192 countries, nearly all indicated that they must
provide regular reports to the sector ministry, other ministry, the legislature
and/or other governmental body.2 Only five countries, Cambodia, Ecuador, Nicaragua, Turkey and Uruguay
have no reporting requirements.3

Figure 5- M: Reporting Requirements by Regulators
by Region

Source: ITU World Telecommunication
Regulatory Database 2010.

Note: Regulators
may be required to report to more than one entity.

The Canadian Radio-television and
Telecommunications Commission (CRTC), which was established by Parliament in
1968, is a typical example of an independent public authority that reports to
Parliament, in this case, through the Minister of Canadian Heritage. The
accountability of the CRTC is addressed by various mechanisms. The CRTC must
submit annual Departmental Performance Reports (DPR) to Parliament. These
reports are based on specific principles contained in the DPR Preparation Guide
and must reflect a comprehensive, balanced, and transparent picture of the
organization’s performance for each fiscal year. This report is made available
on the CRTC’s website.4 The CRTC also must prepare and publish its financial results in
accordance with Treasury Board Guidelines and submit an annual report to the
Standing Committee on Justice and Human Rights.

Additionally, Canada has implemented
a “Proactive Disclosure” public policy so that all Canadians are better able to
hold Parliament, their government, and public sector officials accountable.
Under this policy, there is a requirement of mandatory publication on
departmental websites of travel and hospitality expenses for selected
government officials, contracts entered into by the Government of Canada, and
reclassification of positions.

Procedures to overturn
regulatory decisions

Another mechanism to ensure the
accountability of regulators is to allow for appeals of regulatory decisions to
a higher level in the regulatory and institutional framework. The legal
framework for individual countries is of paramount importance when considering
what mechanisms are available for appealing or overturning regulatory
decisions. The effectiveness of the regulator can be undermined if the appeal
process is closely linked to the executive branch, if regulatory decisions are
put on hold or “stayed” during the appeal process, or if the appeal process is
easily manipulated for the benefit of particular stakeholders.

In the first instance, the country’s
telecommunications law usually articulates the general process for appeals or
reconsiderations of the regulator’s decisions, and then the regulatory
authority implements detailed internal procedures for reviewing and appealing
administrative decisions. Clear and transparent appeal procedures enhance the
independent regulator’s credibility and give operators and other stakeholders,
including consumers, a sense of stability in the regulatory process.

(a)
To whom regulatory decisions are appealed

Typically, regulatory decisions may
be appealed to the regulatory authority itself as an initial step. After
reconsideration by the regulator, the decision usually may be appealed to a
higher authority, such as the sector ministry, or to a court. In the
Philippines, for example, appeals of the National Telecommunications Commission
Board’s decisions, rulings, orders, and resolutions can be filed with the
Supreme Court.5 In many countries, including Malaysia and Nigeria, the
regulator may require that all other remedies for review and appeal provided
under the telecommunications law be exhausted before a person can seek judicial
review.6 Sometimes regulatory decisions may be appealed to a specialized body
established within the regulatory agency itself, such as an Appeal Tribunal or
Appeal Board. For example, Hong Kong (SAR)’s OFTA has established an Appeal
Board comprised of a chairman and deputy chairman that are “eligible to be
appointed a judge of the High Court” and panel members who are not public officers.
The decision of the Appeal Board is final.7 In Kenya, the Communications Act
established an Appeals Tribunal with powers to adjudicate matters between the
regulator and consumers, with powers of the High Court.8

When the appeal to the judiciary concerns
policy matters or technical issues, the trend is for courts to defer to the
specialized regulatory authority. Rather than making a decision on policy or
technical matters, courts will often “remand” or refer a decision back to the
authority for further review and action, sometimes indicating the scope of the
further review.9

The ITU World Telecommunication
Regulatory Database indicates that the judiciary has the authority to overturn
a decision of the regulatory authority in almost two-thirds of the countries
responding to the survey. Only 14 per cent of the respondents stated that the
sector ministry had ultimate authority to overturn the regulator’s decisions.
Appeals to other government authorities also may be possible. For example, in
the Maldives, parties who believe that a decision by the regulator, the
Telecommunications Authority of Maldives (TAM), adversely affects their
interests may first appeal to the minister charged with the responsibility of
telecommunications, and if the aggrieved party remains dissatisfied with the
decision of the minister, then a petition of appeal may be presented to the
President of the Maldives.10 The President’s decision is final and binding on the aggrieved person.

(b)Timeframe
for an appeal to be filed and decided

The timeframe for aggrieved parties
to file an appeal varies from 10 days, such as in the Dominican Republic,11 to 30 days, as in the United States.12 Countries such as Singapore, and the Philippines have deadlines of
14-15 days for filing an appeal against the regulator.13

The timeframe for resolving an appeal
can range from under a month (e.g.,
10 days from filing the appeal with the Dominican Republic
regulator, Instituto Dominicano de las Telecomunicaciones (Indotel), to no
specific timeframe (e.g., the
United States). Most countries
responding to the 2005 ITU World Telecommunication Regulatory Database
indicated that they did not have a defined timeframe for resolving an appeal;
among those which did have a timeframe, it was usually one to six months.

(c)Reasons
for filing an appeal

An aggrieved party may file an appeal
of a decision made by the regulatory authority in specific instances usually
set forth in the telecommunications law. The reasons can be quite broad (any
decision made by the regulator) or more narrowly focused to allow only
procedural appeals. In New Zealand, for example, appeals from the
Telecommunications Commission to the High Court are limited to questions of
law.14 On the other hand, in the Philippines, the authority to appeal a
decision is very broadly defined, where “a party adversely affected by a
decision, order, ruling or resolution may, within 15 days from receipt of a
copy thereof, file a motion for reconsideration.”15 In Hong Kong (SAR), the scope of an acceptable appeal is more carefully
defined as:

(1) Any person aggrieved by:

(a) an opinion, determination,
direction or decision of the Authority relating to:

(i) anticompetitive practices, abuse
of position, misleading or deceptive conduct, and non-discrimination, or
(ii) any licence condition relating to any such section; or

(b) any sanction or remedy imposed or
to be imposed under this Ordinance by the Authority in consequence of a breach
of any such section or any such licence condition, may appeal to the Appeal
Board against the opinion, determination, direction, decision, sanction or
remedy, as the case may be, to the extent to which it relates to any such
section or any such licence condition, as the case may be.16

(d)
Effect of an appeal on a regulatory decision

The question of what happens to a
regulatory decision during the appeal process can have a serious effect on the
regulator’s ability to enforce its decisions. If decisions can easily be
appealed and are stayed or put on hold, then parties have an incentive to
appeal every decision of the regulator to delay the implementation process of
new rules and regulations that might affect them. This is particularly true of
incumbent operators when faced with new rules dealing with the introduction of
new licensing regimes or competition.

When
asked about the effect of an appeal on a regulatory decision in the 2005 ITU
World Telecommunication Regulatory Database, the vast majority of responding
countries reported that they either: (i) allowed a regulatory decision to
remain in force while it is under appeal; or (ii) depending on the merits of the
particular case, either permitted suspension of the decision (or a stay) or
allowed a choice between putting the decision on hold or allowing the
regulation to remain in force. Hong Kong (SAR) is an example of the latter
case, where it is the subject matter of the appeal that determines whether the
appeal suspends the operation of the decision.17 A much smaller
number of countries, about ten per cent of those responding, automatically stay
a regulation when it is undergoing an appeal process.18